life insurance

Depending on who you are and your medical history, coronavirus does have an effect on the price and availability of life insurance. Life cover is very much still available, however you can find out more about how coronavirus affects life insurance at our FAQ Answer copy.

Life insurance isn’t a legal requirement, but most mortgage lenders will ask you to take out appropriate cover. You don’t need to take out life cover from your lender – you can buy it elsewhere.

You can take out critical illness cover as well as life insurance, and this will pay out if you’re diagnosed with a named medical condition during the term of your policy. It generally comes as either:

• Additional cover: If you take out life insurance with separate critical illness cover, you’ll receive a pay out a) if you get a critical illness b) if you pass away (both during the term of your policy)
• Combined cover: If you take out a combined policy, you’ll only receive one pay out, either if you become critically ill or if you pass away (during the term of your policy)

MoneySuperMarket offers the option to take out additional cover once you have completed a life insurance quote, with the premium calculated using the information you gave when applying for life cover. We believe this provides a more flexible and comprehensive solution than a combined policy.

Term life insurance is a policy that offers cover for a set period of time – when the term ends the policy lapses, and if you survive the term then it won’t offer a pay out.

Whole-of-life insurance offers a pay out no matter when you pass away – it will cover you for the rest of your life.

Putting your  life insurance policy  in trust  lets you name the people you want to receive your pay out (your trustees).

There are different types of trusts available depending on your individual or family circumstances. Putting your life insurance policy in trust also protects the payout from inheritance tax.

It can be a good idea to think about updating your life insurance policy if:

• Your health or lifestyle has changed
• Your financial situation has changed (your salary or mortgage might have increased)
• Your family has grown 
• Your relationship with your dependant has changed – although you will need to check your insurer can do this for you

If you are not able to update your existing policy, you may be able to find a policy with a different provider that better suits your new situation. It’s always a good idea to get a personalised quote to see if your current insurance is the best option that’s available to you.

If you have a pre-existing medical condition you should still be able to get life insurance, but you may need to compare your options online.

If you have a more complex condition and you’re finding it difficult to get a price online, a broker or adviser – such as our partner LifeSearch - can help you find a provider that will cover you.

You’ll most likely need to share additional medical information and copies of any tests with the provider to help them understand the risk level of your condition. You’ll be asked to sign a medical release form and the insurer will then request this information from your doctor.

You can end up paying more because of this risk. But it’s important to declare any pre-existing medical conditions when taking out life insurance because if you don’t, your insurer can refuse to pay out for any claims. Answer copy

If you are not able to work because of an illness or injury – which then means you’re unable to afford your monthly life insurance payments – a waiver of premium could mean you’ll be covered during this time.

This will need to be added to your policy as an additional level of cover and it will need to be taken out from the start of your life insurance policy.

If you’ve been diagnosed with a terminal illness and a doctor has given a prognosis of less than 12 months to live, you may be able to make a terminal illness claim on your own  life insurance policy.

This means you would receive the payout now – instead of your dependant receiving the payout once you’ve passed away – and this can help to cover the cost of not being able to work during your final months and getting your affairs in order.

Some insurers offer terminal illness cover as part of their standard life insurance policy. Other insurers require you to add terminal illness cover as an extra level of cover. There will be terms and conditions with both options so you’ll need to read the policy documents to make sure you would be covered.

Some employers offer what’s known as a death-in-service benefit to their employees, which will typically pay a lump sum of four times your salary to a named dependent. This type of policy is not a legal requirement, however, and it’s best seen as a complement to a life insurance policy, rather than a substitute.

You can always cancel your life insurance policy at any time you wish, but the vast majority of policies do not give you money back if you cancel before the end of the term.

You might want to cancel a policy because you’ve found cheaper cover elsewhere, or you might simply not want to keep paying your premiums.

You are legally allowed to take out more than one life insurance policy at a time. For instance, if you have a mortgage you may have to take out a separate policy to make sure your dependents can keep making payments.

Insurers probably won’t let you take out an infinite amount of cover, however.

Life insurance payouts are subject to inheritance tax just like the rest of your estate. If your total estate is worth less than £325,000 (or £650,000 if you are married and leaving it all to your spouse), then your dependents won’t have to pay a penny in tax.

However, if your estate plus your policy are worth more than that in total, inheritance tax will be due on anything above that threshold at 40%. This means that if you leave a total of £400,000, the first £325,000 is tax free. The rest – £75,000 – will be taxed at 40%, leaving £45,000.

Your family can avoid paying inheritance tax on your life insurance if you write your policy in trust.

No. If you are still alive at the end of your life insurance policy term, the money is gone.

When you take out life cover, you’ll get:

• Guaranteed premiums: The amount you pay in premiums every month will stay the same throughout, unless you alter your policy
• Amount of cover: The amount of cover and the length of your term is entirely up to you
• Critical illness cover if you choose: You can add critical illness cover to your life insurance policy at an extra cost – and this will include cover for your children too

However your life insurance policy won’t include:

• Cash in value: You won’t be able to cash in your life insurance policy during the term of cover
• Cover if you miss premium payments: If you don’t pay your premiums your policy will be voided
• Cover for death outside the policy term: If you pass away outside of the stated policy term there will be no pay out on your policy

Some insurance providers offer extra benefits alongside your life policy. These can include:

• Remote GP services

• Prescription services

• Legal advice 

• Claim support and counselling services

In short – it depends. Everyone’s individual needs are different, and depend on factors like your health and lifestyle. So, the ‘best’ life insurance provider is the one that has the policy that suits what you need – this won’t be the same for everyone.

When choosing which provider to go with, it comes down to more than price. As well as comparing the price you’ll pay, it’s important to consider the number of exclusions, benefits, and how much flexibility a policy has, as well as what percentage of claims the insurer pays out.

Life insurance provides a financial safety net for your loved ones if you’re no longer around. It pays out a lump sum when you pass away, which can be used to pay off debts like a mortgage, and provide support for your family’s living costs.

Health insurance covers the cost of private healthcare. You pay monthly or annual premiums, and then if and when you need private medical treatment, your provider will pay for some or all of the cost.

Critical illness cover pays out a tax-free lump sum if you’re diagnosed with an insured medical condition during the term of your policy. It’s not the same as life insurance, which pays money to a person or people you choose in the event that you pass away.

Mortgage insurance is also called decreasing-term life insurance, and is designed to clear your mortgage if you die before it’s paid off.  The policy lasts for a specific period of time (or ‘term’) and should typically be worth the same value as your mortgage. As time passes and you continue to pay down your mortgage, the value of the policy goes down as well. If you pass away during the term of the policy, your dependants will have enough money to clear the mortgage.

It’s different to level-term life insurance, which lets you choose how much you want the insurance to pay out and how long you want it to last for. Your loved ones will get the full pay-out if you pass away, and this could then be used to clear the mortgage alongside any other debts or provisions for your dependants’ future financial security.

You work hard to earn your money, and we don’t think you should waste a penny of it paying over the odds on your household bills. That’s why at MoneySuperMarket, we’re on a mission to save Britain money.

• Whip your credit score into shape with Credit Monitor
• Super save over and over again with Energy Monitor
• There are always more ways to save with MoneySuperMarket 

So how do we make our money? In a nutshell, when you use us to buy something, we get a reward from the company you’re buying from.

You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.