Life insurance is often regarded as essential for protecting your loved ones from financial hardship should something happen to you. However, buying life insurance isn't always as straightforward as it may seem. If you don’t do your research properly, you could end up paying too much for a policy that doesn’t suit your needs.

There are plenty of things to consider before signing on the dotted line. This can include the type of policy you want to buy or how much cover your family may need. Here are five of the most common mistakes people make when buying life cover...

5. Buying the Wrong Type of cover

The first mistake many people make when buying life cover is choosing the wrong type of policy. This can lead to you spending more money for cover you may not need, or having too little cover in place. 

The main types of life insurance are whole and term life cover. Both these types payout cash lump sum when you die however there are some differences.

Term life policies cover you for a set period of time, for example 30 years. This type of policy usually offers lower premiums than whole life cover, however the policy only pays out if you die within the policy term. If you survive your chosen policy term, the policy simply expires and you won't be able to claim a return on the premiums paid previously.

Term life insurance has 3 levels of cover:

  • Level term - both the policy payout and monthly premium cost is fixed throughout the term.

  • Decreasing term - Covers large payments like a mortgage. The death benefit of your policy decreases over time as you make repayments.


  • Increasing term - Designed to protect the value of the payout from inflation. In doing so the payout increases over time, however bear in mind that  your premiums will also increase too to account  for this. .

Whole life policies, on the other hand, arguably offer greater protection because they pay out regardless of when you die. However, premiums tend to be more expensive because of this.  Ultimately, it comes down to whether you want peace of mind for the future or cover the short-term.

You can also get critical illness cover - while this does not cover you from death, it pays out a lump sum if you are diagnosed with a critical illness or injury which meets your chosen provider's specified definition and severity.

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4. Not Buying Enough cover

Another mistake people often make is failing to buy enough life insurance cover. It's important to get an amount of cover which suits your needs. For instance, if you have young children, you'll probably want to ensure that they're financially protected in case something happens to you.

If you have no financial dependents, then you may not require as much cover as someone who does. You also need to think about what would happen if you died without providing adequate cover for your partner or spouse.

To gain a better understanding of how much cover you need, ask yourself the following questions:

  • What is your household's monthly income and outgoings?

  • How much financial support does your family need?

  • Do you have financial obligations, such as a mortgage? Or any other unsecured loans or debts?

  • How much savings does your family have?

  • What will my lifestyle look like after retirement?

Products & Services from the leading financial brands

  • Zurich
  • Legal And General
  • Aviva
  • AIG
  • Beagle Street
  • LVE
  • Royal London
  • Vitality Life
  • Virgin Money
  • Budget Insurance
  • Scottish Widows

Among many things, the payout from a life insurance policy can help your family with costs such as:

  • Living expenses

  • Household bills

  • Repayments on a mortgage

  • Education and university fees

  • Funerals

  • Childcare support

If you're unsure on how much cover you need, speak to one of our consultants. They can help guide you in finding a policy that matches your personal circumstance and the needs of your loved ones. Learn more on how to apply for life cover with guidance.

3. Applying for life cover too late

Applying for life insurance too late could mean missing out on cheaper rates. Life insurance companies use certain criteria to decide on the best rate for each applicant. These factors typically include one's age, health, occupation, and even smoking habits (for instance, smokers typically have higher premiums than non-smokers). 

So, if you wait until later in life to apply for life cover, you might miss out on a lower premium. However, there is some good news. If you do decide to apply for life insurance at a later stage, you can still qualify for cheap rates by choosing the right type of policy.

For example, if you're looking for cheaper premiums, you may want to consider buying term life insurance. If both you and your spouse are looking for cover, you may consider looking at joint life cover

This type of cover protects two people under a single policy - however, it’s worth noting that if you take out a joint life policy on a ‘first death’ basis and one of the policyholders pass away during the policy term; the surviving policyholder would need to apply for cover again should they still need it.

2. Withholding information from your provider

When applying for life insurance, it's important to tell your insurer everything about your medical history. This includes details such as whether you've had cancer, heart problems, high blood pressure, diabetes, or other conditions.

The reason why it's so important to share all your medical history is because insurers use these details to determine your risk profile and on what basis the insurer may be able to cover you.

If you are not 100% open and honest with the answers to  your questions on your insurance application, you may invalidate your policy and it could mean your loved ones cannot benefit from the policy in the event of a claim.

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1. Not Shopping Around for the Best Rate and Policy

When shopping around for life insurance, you should compare quotes from multiple providers. Doing so allows you to find the cheapest rate possible. The best way to shop around is to contact several insurers and ask them for their quote. Then, compare these quotes side by side.

However, this doesn't always guarantee you the best rates as many companies work on commission. This means they earn money if you buy through them. In this case, the best route is to apply through a discount advisory broker like Cavendish Online. We don't work on commission, instead we charge a one-off fee for our services.

Our commitment to our customers is to help them find the best policy for the best value. We compare quotes from leading providers, so you have a broad range to choose from. Learn more about applying for life cover with Cavendish Online.

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