Ever wondered what life insurance questions you’ll be asked…
According to research from Canada Life, 63% of UK adults don't have an active life insurance policy in place.
Could this be because they don’t see the need for life insurance or because they don’t know much about the product?
The internet is full of life insurance myths and facts; Reassured are here to assure you of what’s true, and what’s false, to help you make an informed decision on whether it’s right for you.
In this article, we’ll be busting the most common life insurance myths, such as:
Life insurance is a type of policy that pays out a cash lump sum to your loved ones if you pass away during the term.
During the application process, you’ll choose your sum assured (how much you’d like to be paid out) and how long you’d like to be covered for.
You’ll need to pay a monthly premium to keep your cover valid and, if you pass away during the term of your policy, your loved ones can make a claim and a pay out will be issued.
A life insurance pay out can help loved ones to cover mortgage or rent payments, cover daily family living costs, provide funds to pay for your funeral or it can be left as an inheritance for loved ones to spend how they wish.
There are different types of policies to suit different needs. Typically, you’ll have the choice of:
You’ll also have the option to add additional levels of cover to your policy in the form of:
When it comes to life insurance, there’s a plethora of information (and misinformation) on the internet.
Without the right guidance it can be hard to know what to believe.
Below we have taken 10 common myths about life insurance and will be exploring whether they’re true or false...
False - The most common myth surrounding life insurance is that it’s too expensive. But this simply isn’t true.
Securing affordable life insurance is possible. In fact, it’s possible to take out life insurance from just £3.61 a month through Reassured.
It’s true that some forms of life insurance are more expensive than others, but this doesn’t mean that finding a policy to fit into your budget is a difficult endeavour.
The cost of your life insurance premium will depend on a variety of factors which are taken into consideration during the application process. This includes:
†The table below shows common types of life insurance and example prices for each age group. These examples are based on a non-smoker who’s in good health, for £100,000 of cover.
|Age||Level term price per month (20 year term)||Decreasing term price per month (20 year term)||Whole of life price per month|
Comparing quotes from multiple insurers will help you find a good price. Reassured can help you with this to ensure you secure the lowest premium from our panel of leading insurers.
Our quotes start from just £3.61 per month, so why not get in touch?
False - It’s unlikely that you’ll be declined due to having a pre-existing medical condition.
When applying for life insurance with a medical condition, insurers will take your personal circumstances into consideration.
If your condition is mild and/or has little effect on your everyday life, your premiums are unlikely to be greatly affected and, in some cases, it may be possible to take out cover on standard terms.
If your condition is more severe, it’s still possible to secure cover. However, your premiums may be inflated (or loaded) due to the increased risk and your policy may need to undergo manual underwriting.
For more difficult cases, it can still be possible to take out cover using the help of a specialist insurer. These are providers who’re better equipped to provide cover to high-risk life insurance applicants.
We have written a comprehensive article on securing life insurance with a pre-existing condition if you require additional information.
At Reassured we work with both leading providers and specialist insurers to ensure you find the cover you need.
True / false - You may not need life insurance if you’re single, have no one that depends on you financially and have no large financial commitments.
However, securing life insurance at a young age can often be the best time to do so.
This is because insurers take key information into consideration at the point of application, including your age and your medical history.
When you’re young and in good health you pose less of a risk to the insurer, so you’re usually rewarded with favourable premiums.
As you get older, your life expectancy shortens and insurers deem you as more of a risk to insure. For this reason, premiums tend to be higher the older you take out life insurance.
If you take out life insurance at a young age, it can be possible to change your sum assured as you get older and if your circumstances change.
Some policies come with a special events clause which will allow you to change your level of cover without the need for additional underwriting (please note, not all policies have this option).
Despite this myth, the Coronavirus pandemic had a positive influence on the amount of young people taking out life insurance, with 40% of those aged 18 - 34 taking out a policy after the first lockdown.
If you're aged 18 -30 you may want to read our life insurance for young adults article for more information.
False - While having death in service benefit in place can help to reduce the amount of cover you may require, it doesn’t mean you don’t need life insurance full stop.
With death in service benefit, the amount paid out to your loved ones upon your passing is often a multiple of your salary, (most commonly three times your salary).
While this is a generous benefit, it’s unlikely to cover all financial commitments for your loved ones - such as a large mortgage.
It also won’t follow you, so if you cease employment with an employer who offers this benefit there’s no guarantee that your next employer will provide death in service - which could leave your family unprotected.
A separate, personal, life insurance policy can help to top up your death in service benefit to ensure that essential costs are covered for your loved ones.
False - A common misconception about life insurance is that insurers don’t pay out, but this isn’t true.
Only in rare circumstances will insurers deny a pay out.
Statistics from ABI (The Association of British Insurers) shows that in 2022, 98% of all protection claims were paid out, totalling £6.85 billion3].
If you want peace of mind about some of the UK’s leading providers and their pay out rates, you can read our full life insurance pay out rates guide.
False - The loss of a stay-at-home parent can have a devastating financial impact on your family.
If a stay-at-home parent passes away, could the breadwinner afford to pay additional childcare fees or would they need to cut back on working hours, or even change career, to allow them to look after the children?
It’s estimated that the unpaid work of a stay-at-home parent costs around £108,837.
With this in mind, it’s important for both the breadwinner and stay-at-home parent to be adequately protected.
False - While insurers do have the right to request that you undergo a medical examination during the application process, it’s rare for this to happen.
Insurers are only likely to request a medical exam if you disclose a severe pre-existing medical condition, or other high-risk factors.
This is so that they can gain a better understanding of your health and wellbeing, and how your condition affects you, before offering you cover.
The exception to this is an over 50s plan, where you could secure life insurance with no medical information being disclosed. If you’ve struggled to secure life insurance without having to undergo a medical in the past, this could be an ideal option for you if you fit into this age bracket.
Why not compare over 50s plans from two leading providers using our award-winning broker service?
False - You’re not legally required to take out life insurance to protect your mortgage, but as a mortgage is the largest debt you’ll likely have in your lifetime, it makes sense to protect it.
If you were to pass away, could your partner afford to make mortgage repayments without the help of your income?
A life insurance policy could help provide the funds for the mortgage to be paid off in full to ensure your loved ones can remain in the family home.
Some lenders may ask you to take out life insurance as a precondition for letting you borrow money and they may request you take out a policy before they release any funds to you.
Many lenders will push you to take out cover through their preferred life insurance provider, but it’s unlikely you’ll get the best deal by doing this.
A friendly member of our team can help you to compare quotes from some of the UK’s best life insurance providers to help you find the right policy (at the right price) to help protect your mortgage.
Simply get in touch for your FREE no-obligation quotes.
False - While it can seem like a daunting task initially, securing life insurance is actually a straightforward process.
Taking out life insurance can work as simply as:
There are many life insurance experts out there that are happy to help you in your quest to secure life cover.
A life insurance broker (like Reassured) can provide you with all the information you need and decode any jargon you might not understand, to help you make an informed decision on what option is best for you.
Why not read our how does life insurance work in the UK article for more information?
False - The Coronavirus pandemic actually had a minimal effect on life insurance.
The only changes are that you may be asked some COVID related questions during the application process.
Rest assured; you can still take out life insurance even if you’ve had Coronavirus.
It’s unlikely that you’ll be declined, but your application may be postponed if you have tested positive for COVID during the last 30 days.
This is so that you can make a full recovery before being offered cover protection.
You can read our extensive life insurance and coronavirus guide to find out everything you need to know.
What is the most common reason for taking out life insurance?
Buying your first home, getting married and starting a family are common triggers for securing life insurance.
But reasons for taking out cover can vary from person to person. Other common reasons include:
Does life insurance pay out forever?
No, a life insurance policy will pay out in one lump sum.
The exception to this is a family income benefit (FIB) policy, which will pay out in monthly payments to your loved ones for the remainder of the policy term.
For example, if you have a policy with a 20-year term and pass away 5 years into the policy, your loved ones will receive pay outs for the remaining 15 years.
What reasons will life insurance not pay out?
It’s very rare but in some instances, a pay out can be denied. Reasons for this can include:
Who gets life insurance money?
Proceeds from a life insurance pay out will be paid to the named beneficiary/beneficiaries of the policy.
If there’s no beneficiary listed, the funds will be added to your estate.
How do you claim life insurance money after death?
After your passing, your loved ones can make a claim on your life insurance policy.
They’ll need to contact your provider in order to start the claims process.
For this reason, it’s important that your loved ones are aware of the policy and know where to find the necessary details.
Can life insurance be used to pay for your funeral?
Yes, the funds from a life insurance pay out can be used by your loved ones to help cover your funeral costs.
However, the funds won't be paid directly to a funeral provider.
If looking for a policy to specifically cover funeral costs, you may want to consider a funeral plan.
Please note, Reassured are unable to sell funeral plans. If you are looking for a funeral plan we suggest you check the FCA register to find a regulated provider.
Hopefully this article has helped to clarify any myths about life insurance you may have heard.
Taking out life insurance doesn’t have to be a difficult or confusing endeavour.
Using a broker service, like Reassured, will allow you to ask all the questions that you need - helping to clear up any life insurance myths and misconceptions.
Not only that but we can help you to compare quotes from some of the UK’s leading providers.
And the best part is, our quotes are fee-free and without obligation - so why not get in touch?
Ever wondered what life insurance questions you’ll be asked…
What cover protection do you need to secure when taking out…
Whilst rare, this comprehensive guide will help you to…
Securing life insurance doesn’t need to be daunting. Here…
According to internal data from Reassured, the average cost…
What’s the best life insurance for smokers? Find out…
A guide to life insurance for drug users from award-winning…
It's estimated that 1 in 13 of us Brits suffer from alcohol…
Have you ever asked 'Can you have more than one life…
Many life insurance policies now come with a free welcome…
Compare level term vs decreasing term life insurance to…
Life insurance helps mums secure the financial future of…
Yes very pleased with my choice very helpful easy to understand and very pleasant transaction all good!Mrs M Rushworth
Very professional and reassuring. Life insurance sorted in about 10 minutes.Stephen Davies
very courteous and friendly. Polite professional and empathic.Stedroy Fenton
Another happy customer I am. They are very professional and kind. Fully communicative. I recommend.Piotr Stepien
Really attentive during the call, good clear guidance throughout. Well done.Michael Reynolds
Amazing service quick fast and easy and Joey was a star on the phone really help me thanks.Sera Woolley
I made the right choice and now I feel relieved that I did.glyn
Really genuine kind and compassionate team with great knowledge and friendly approach highly recommend them!Katelia Merritt
I must say Jake took me through every step and was brilliant, recommend them anytime.Allan Green
Very happy and everything explained well, so glad a took the time to take the call, normally I would say I'm busy. But compared to other company's we save so much more money.Jenny Berry