10 Facts Worth Knowing About Life Insurance Policies

1. Life Insurance Isn’t Usually As Expensive As You Might Think

Many people overestimate the cost of life insurance, which perhaps leads them to swerve the idea altogether.  However, Life insurance should be thought of as fantastic value for money when you consider that cover could work out at just a few pence a day.

Each insurance company has their own guidelines for what can be underwritten. If you have health conditions, some can be more lenient (and less expensive) than others, so it’s certainly worth shopping around to make sure you’re getting a good deal.

2. Cover Can Be Arranged In Under 30 Mins

What else can you do in half an hour? Watch a TV programme? Take a nap? Or, have the peace of mind that comes with having a life insurance policy in place.

Thanks to the internet, it’s never been easier (and quicker) to arrange and compare low cost life insurance policies online, with insurance providers always looking to streamline the process.

3. Cover Is Cheaper When You’re Younger

Simply put, the younger you are when you take out your policy, the cheaper your monthly premiums will be - so keep this in mind.

Your age, health in general (including if you smoke) and lifestyle are just a few factors that are considered when applying for cover and how much your monthly premium will be.

4. Cover Through Your Employer May Not Be Enough

Life cover through work is certainly a good benefit to have, but you can’t always assume that this cover is adequate for your needs. Many employee packages include a ‘death in service' benefit.

This covers you for a multiple of your salary that would go to nominated loved ones if you were to die whilst you worked for the company, so you might not even consider requiring an additional life insurance policy. 

Bear in mind, however, there’s very little control you have in terms of individual cover levels, and the moment you stop working for the employer, you’ll no longer be covered under that policy. Your loved ones will be much better protected by having a policy on top of whatever benefits come through your employment.

5. Life Insurance Covers More Than Just Death

Many people assume life insurance only pays out if you die unexpectedly. However, some policies can include options such as critical illness cover or income protection add-ons. These can provide a lump sum or ongoing support if you’re diagnosed with a serious illness, helping cover bills or mortgage payments.

Lots of life insurance policies may also pay out early if you are diagnosed with a terminal illness and expected to live less than 12 - 18 months. 

6. There Are Plenty of Policies to Choose From

There are a number of different types of policies to suit different circumstances. Some can work better in certain situations, too. This includes:

• Term life insurance – which provides cover for a fixed period, ideal for mortgages or raising children.
   

• Whole life insurance – that lasts for your entire life and guarantees a payout as long as premiums are paid, often used for inheritance or funeral costs.
   

• Joint life insurance – which covers two people under one policy, paying out either on the first death or second death, depending on your needs.
   

• Decreasing term insurance – where the payout reduces over time, usually aligned with repayment mortgages, making them more affordable.

With these options on offer, you're more likely to find suitable protection so you are not paying for cover you don’t need. The costs can vary between policies as well as your circumstances, but each can provide financial support where needed.

Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.

7. Policies Can Be Tailored To Your Needs

Most providers allow you to customise your policy to suit your financial commitments and lifestyle. You can often choose:

• The level of cover – and whether it's enough to support your family/loved ones, pay off debts, or cover future expenses.

• The policy term – this can range from short-term protection while your children are dependents, to longer-term policies for ongoing financial obligations.

• Optional extras – add-ons such as income protection or critical illness cover to provide extra protection.

The great thing is that you only pay for the cover you need, and it can evolve as your needs change. For example, if you later take on a mortgage or have children, you may be able to adjust your policy to match your new circumstances.

8. Health Conditions Don’t Automatically Exclude You

Many people assume a pre-existing medical condition automatically rules them out from getting cover. In reality, insurers will assess your medical history and may still offer a policy, sometimes with:

• A higher premium

• Specific exclusions for the condition in question

• Additional underwriting requirements, like medical reports or GP questionnaires

Different providers assess risk in different ways, so it’s worth shopping around or speaking to an adviser. Even if you have conditions such as high blood pressure, diabetes, or asthma, you may still be able to secure cover.

9. It Can Help With Inheritance Tax

Many people don’t realise that life insurance can actually do more than just support your family or loved ones, it can also help with inheritance tax. A whole-of-life policy written in trust can pay a lump sum directly to your beneficiaries, outside of your estate. By doing so, they can use the money to cover any IHT bills or other costs without delay.

10. It Can Protect A Business

Certain policies, like relevant life insurance, are specifically designed for business owners, directors, or key employees. These can help with aspects like business continuity, cover outstanding loans, or provide funds to buy out a partner’s share if something unexpected happens.

For example, if a key person in your company were to pass away, a payout from a life insurance policy could help the business manage financial obligations, replace lost revenue, or keep operations running smoothly.

Similarly, business protection insurance, such as key person cover or shareholder protection, works alongside life insurance to safeguard your company against financial risk.

Do You Already Have A Policy?

Many people who have life insurance in place tend not to review their cover very often. However, it’s important to understand if the policy still meets your needs (as well as finding cheaper life insurance) - that’s where Cavendish can help.

If you’re not sure, speak to us over the phone and we’ll be able to help guide you to what the best option will be for you.

‘Term’ life insurance policies run for a fixed period of time (known as the ‘term’ of your policy) eg. 10, 15 or 25 years - and will pay out if you were to die during the term of the policy. There’s no survival lump sum payable at the end of the term.

With a ‘whole-of-life’ insurance policy, the clue is in the name. Unfortunately, we all die one day, so as this policy is ongoing, it will pay out a lump sum whenever that day comes. Naturally, these policies are typically more expensive than term insurance policies since as long as you keep paying your premiums, the insurer will always have to pay out, whereas you may outlive a term insurance policy.

TIP: ‘Whole-of-life’ insurance is also known as life assurance by many insurers.

One of the main benefits of whole-of-life insurance is that it can help your family deal with any bills associated with inheritance tax. It also may appeal to you if you’re determined to leave some form of inheritance to your loved ones, or if you want to help with your funeral costs.

Need Advice? Speak With Us Today

Cavendish Online is committed to ensuring our fees and charges are highly competitive and transparent - so you know exactly what you are paying for when you use our different services. 

We can help you find the most suitable and affordable option for your individual circumstances, so we seek products from leading UK insurers - with minimal charge amounts. To find the best policy for you, we won’t limit your search to just one company.

If you don’t currently have any cover in place or you’re unsure if your cover still meets your needs - the team at Cavendish can help. Speak to us today for more information and to get a quote for life cover.