Search
When it comes to buying life insurance, it can be difficult to say when the time is right - there is certainly no ‘one-size-fits-all’ answer. Is it too soon to take out a life insurance policy? Maybe, maybe not. Is it too soon to start thinking about it? Never. There’s no time like the present to start exploring your options!
If others depend on you financially - or you have debt - it's important to have life insurance in place.
The best type of life insurance policy for you depends on your individual situation. Know the difference between ‘term’ and ‘whole-of-life’ policies to choose what’s best for you and your family.
The sooner you purchase life insurance, the better, as it becomes more expensive every year due to your age and the increasing likelihood of medical conditions.
Having ‘some’ cover in place is always better than putting it off to take out your ‘ideal’ level of cover.
When it comes to life insurance, the younger you are, the less expensive it will generally be. However, younger people also tend to put off buying life insurance due to other financial concerns, such as car finance, student loan repayments and paying a mortgage. While paying bills is critical, missing out on buying life insurance at a young age can be costly, much like delaying saving for your retirement.
So when should you look to buy cover?
Upon getting married, or entering a long-term relationship, many couples may not recognise the importance of life cover. But it's essential to consider, in case something happens to either you or your partner. When it's all said and done, couples need to be proactive and think about their future.
One option is joint life insurance - this covers both you and your partner in the event of either of your deaths. A joint policy ensures both parties are protected, even if one passes away before the other.
There are multiple options for joint cover, including term life insurance and whole life insurance. You can either take the policy out to pay upon the death of the first party or the death of the second person.
If you purchase a home alone or with someone else, insuring the outstanding mortgage amount may provide much-needed peace of mind. This is particularly useful if you or your partner were to pass away. A policy payout could help pay off a mortgage, easing the burden of a partner or loved one having to deal with this on their own and could help them keep the family home.
Life cover may also provide protection by covering bills and other costs associated with the home, such as maintenance and repairs. Mortgage life insurance is one way to make sure your family, loved ones and home is taken care of if something happens to you.
Having children or dependants can be one of the most significant life events - but also reinforces the need for protection. In order to avoid putting your family and loved ones at financial risk, it’s up to you to take out life insurance.
There are two main types of life cover:
Whole life insurance (also known as life assurance) pays out a lump sum regardless of when you die. The payout is guaranteed so long as you keep paying your monthly premiums. Failure to keep up with your monthly premiums may result in your plan being cancelled, and you losing your cover.
TIP: Whole-of-life insurance is also known as life assurance by many insurers.
Term life insurance covers you for a set amount of time. The policy pays out if you die during the term. If you survive the term, the policy expires and you won’t receive a return on your monthly payments. However, because cover is temporary, term life insurance is often cheaper than other types of cover.
Life cover could provide a financial future for your children or dependants, ensuring they are supported if anything happens to you. It may also help cover expenses such as:
Education costs: helps pay for your child's education if you are no longer around to provide for them.
Provide additional funds: provide extra funds for your family to help manage any expenses that may arise in your absence.
Living expenses: helps cover day-to-day living costs, such as rent, food and other financial commitments.
Funeral expenses: funeral costs can be expensive, so having a life policy in place can help prepare for this eventuality.
Thinking about starting a business, or are you already running one? Then don’t overlook the need for life insurance.
For example, you may want to ensure that the business can still run if you were to pass away. Or you may have business loans that need to be paid off.
You may also want to consider critical illness cover. This may protect you in the event you are diagnosed with a serious illness or disability. It could provide a lump sum that will help keep up with your business costs.
Another option could be income protection. Income protection aims to pay out a regular, monthly amount (usually up to 65% of your salary) if you are signed off sick by a doctor.
To learn more about business protection and the other plans available to you, please visit our business protection page. Or, to speak to an adviser about your options, please call us on
As you enter retirement, it’s just as important to consider having life cover in place. This can help provide financial security for any remaining dependents, such as a spouse or children, who may rely on your income should the worst happen.
With life insurance, the policyholder can designate a beneficiary who will receive the benefit payout upon their death. This gives peace of mind and security to those who may be financially dependent on you during your retirement years.
Whole-of-life cover may appeal if you are determined to leave some form of inheritance to your loved ones, or if you want to help with your funeral costs. It can help your family deal with any bills associated with inheritance tax. Currently, if an estate is valued at more than £325,000, inheritance tax will be charged at 40% on the value of the estate above that threshold[1].
However, the tax will need to be paid before your loved ones are given access to your estate. This can put your family in a difficult position - they need to pay a tax bill which may run into (tens of) thousands of pounds, but they wouldn’t be able to use the money in your estate to do so.
Not all debt disappears when you die. Instead, the duty usually falls to your family or estate executors to pay them off. As a result, they may be forced to sell your home or other assets to clear the debt.
Some examples of debt can include:
Mortgages
Personal loans
Credit cards
Car loans
Overdrafts
To cover these types of debts, you may want to consider decreasing term life insurance, as the cover should reduce roughly in time with the debt you are covering. Because the sum assured decreases, premiums for this type of cover are generally cheaper than level term insurance and remain fixed for the life of the policy.
It is a common misconception that you only need life insurance if you have a mortgage and that a policy payout should be used only for this purpose. It’s true that many people take out life insurance when they buy a house, giving them peace of mind knowing their mortgage debt would be paid off and wouldn’t pass to their loved ones, should they pass away. But if you don’t have a mortgage, you shouldn’t rule out life insurance, and here’s why!
Life insurance payouts don’t have to be used to pay off mortgages, they can, in fact, be used however you like! For example, your loved ones might decide to use a policy payout to replace your lost income - helping to cover rent, bills and utilities. They may decide to pay off other debts or even pay for your funeral costs (which might be more than you think!).
Are you a renter? Good news! Some insurers offer versions of their standard life insurance and critical illness insurance products that are designed specifically for you. If you’d like to know more, get in touch with our team of insurance experts on
01392 241 850
(Monday to Thursday 9am – 5.30pm, Friday 9am – 5pm)
Many parents take out a life insurance policy for the comfort of knowing that their children would be supported if they were sadly no longer around, as their partner would receive the financial help they need to continue caring for the children.
But in reality, most couples share more than just childcare and its associated costs. In fact, they often pool together resources in order to be able to afford a certain lifestyle, which one of them could not maintain on their income alone.
If you are in a committed relationship, regardless of whether children are in the picture, you and your partner are likely to be reliant on each other’s contribution to the household expenses and the mortgage. You may also have joint or individual debts that your partner would be left to shoulder alone in the sad event of your passing.
So, kids or no kids, if you believe that your partner would struggle to cover the costs that would fall solely to them if you were to pass away, then it may be worth considering life insurance.
Yep, you guessed it... it depends! Of course, it’s not only spouses who may need some financial support in the event that you pass away. You may want to use a life insurance policy to help your family members cover the cost of your funeral, for example.
There are also products that pay out directly to you, if you become unwell. If you’re diagnosed with a serious illness, a critical illness policy could provide the financial support you need to cope with your condition. Income protection insurance, on the other hand, could enable you to maintain your lifestyle if you became too ill to work for an extended period of time.
No matter what type of policy you go for, the likelihood is that the later you leave it, the more expensive insurance will be.
This is understandable, as the older we get, the higher our health risks become. Insurance is there to protect against the unexpected and the more likely that unexpected thing is, the more likely insurers are to need to pay out, so the higher the premiums will be.
This means that taking out life insurance sooner rather than later is generally a good idea. Your insurance needs are likely to change as you go through different stages of life.
If you do decide to purchase a policy when you are young, it might be wise to choose one that offers Guaranteed Insurability Options. These will allow you to easily adjust your policy to suit a change in your circumstances further down the line. For example, you might be able to increase your cover level if you receive a pay rise.
As a general rule, no matter what your age, you may find that life insurance is less expensive than you think, and there are all sorts of different affordable options out there to consider.
Apart from age, there’s also other factors that affect the cost of life insurance, so we’ve put together the following points to understand how to keep the costs of life insurance down:
1. Live a healthy lifestyle – we all know what’s bad for us, so avoid drinking, smoking and try to keep fit and well.
2. Compare a range of policies and take your time - check out the policy features and exclusions too, don’t just think about the price.
3. Think about long-term affordability - the longer you live, the longer you’ll be paying premiums, so be budget-conscious before you commit.
4. Take out cover when you’re young - typically the younger you are when you take out the policy, the cheaper your premiums will be.
Whatever your situation, there’s always no better time than now to take out life insurance cover, so speak to Cavendish Online today who can help guide and support you in choosing the right policy for you and your family on 01392 241 850.
[1] 2020/2021 Tax Year. Source:https://www.gov.uk/inheritance-tax
