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How much does life insurance cost?
MoneySuperMarket data found that the average monthly cost of life insurance for a 30-39 year-old was £9.64*.
The cost of life insurance can be influenced by the cover type you choose (single or joint life insurance) and the life insurance term you choose (level or decreasing term).
Your monthly payments will also be influenced by the amount of cover you need and your health and lifestyle.
*The average cost above is based on MoneySuperMarket customers looking for single life insurance only (without critical illness cover), for a level term policy with a total cover amount between £150,000 and £200,000 for 10 – 20 years, from January to December 2018.
How much life insurance do you need?
The amount of life insurance cover you take out would ideally be enough to cover your mortgage repayments and the needs of your family if you were no longer around.
The average cover amount that consumers searching for single life insurance look to take out is £150,000. The average cover amount that consumers searching for joint life insurance look to take out is £183,000, according to MoneySuperMarket data from January – September 2018. This amount also includes critical illness cover where it has been added to a policy.
When should you get life insurance?
If you’re in a position where a partner or a child relies on you financially, and they would struggle to pay for the things you pay for or help to pay for if you were no longer around (for example, a mortgage), then this would be a good time to think about life insurance.
Do you need life insurance to take out a mortgage?
Life insurance isn’t a legal requirement, but most mortgage lenders will insist on you having life insurance.
What does it mean to put a life insurance policy in trust?
Putting your life insurance policy in trust lets you name the people you want to receive your life insurance payout (your trustees).
There are different types of trusts available depending on your individual or family circumstances.
Putting your life insurance policy in trust also takes your policy outside the scope of inheritance tax. This means there won’t be any tax charged on your life insurance policy payout.
When should you update your life insurance policy?
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 aren’t able to update your life insurance policy then you might be able to find a policy with a different provider that suits your new situation better. 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.
Can you get life insurance if you have a pre-existing medical condition?
Most life insurance providers that offer cover will be able to insure you if you have pre-existing medical conditions, but you may need to compare online before you find one.
If you have a more complex condition and you’re finding it difficult to get a price online, a broker or advisor can help you find a provider that will cover you. We work with life insurance advisors LifeSearch who can help you find a life insurance policy if you have a pre-existing medical condition that means you can’t be insured online.
You’ll most likely need to share additional medical information and copies of any tests with a 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 for your pre-existing life insurance 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.
What happens to your life insurance policy if you can’t meet your payments?
If you aren’t able to work because of an illness or injury – which then means you’re unable to afford your monthly life insurance payments – then 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.
Can you claim on your own life insurance policy for a terminal illness?
If you’ve been diagnosed with a terminal illness and a doctor has given a prognosis of less than 12 months to live then 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 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. With some, you’ll need 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.
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