How long does life insurance cover last?

Having a life insurance cover in place is generally a smart idea. Nobody wants their family to be left out of pocket when they're no longer there to provide for them. It ensures your loved ones are left financially protected for the difficult times ahead.

But how long does life insurance cover typically last for? In this article we'll look at how long a policy can last as well as the types of cover available...

What does life insurance cover?

The pay out from your life insurance policy can support your family with monthly outgoings that you would have previously covered - giving them a financial safety net should the worst happen.

Types of life insurance cover

There are two main types of life insurance policies - whole life & term life insurance.

Whole life insurance does exactly what it says on the tin. It covers you for the rest of your life, paying out a lump sum to your family when you eventually die (so long as you keep up with your premiums). This type of life cover is typically more expensive than its alternative - term life insurance.

Term life insurance has a set policy term which lasts for a limited number of years (agreed at the policy outset). Unlike whole life cover, this policy type only pays out if you die within your agreed policy term. 

Term life insurance also have 3 levels of cover:

Level term - The payout value and premium rate is fixed throughout the policy term.

Decreasing term - Used to cover large payments such as a repayment type mortgage. Your pay out value decreases over time aby a set percentage, agreed at the policy outset (the percentage the policy sum assured decreases by should be noted in your policy illustration).

Increasing term - Intended to try and help protect the value of your policy from inflation. In doing so, the payout value increases over time (though bear in mind that your premiums will increase too).

Additional policies such as critical illness cover are also available. Although this does not protect you from death, it pays out if you are diagnosed with a critical illness or injury which meets your chosen provider's definition and specified severity.

Another type of policy available is joint life insurance cover. A joint life policy is considered as an ideal option for couples who want to buy cover without having to buy separate policies.

How long does life insurance cover last?

As with any type of insurance cover, you are required to pay a monthly premium to your insurer. Failing to make these monthly payments could result in your cover being ended early (i.e. the policy lapsing). In this situation, you won't be able to claim any money for premiums already paid for up to this point - the cover will simply cease.

The length of your policy mainly depends on the type of life insurance cover you have. For example, whole life cover lasts for the remainder of your life - so the policy pays out no matter when you die. However, term life insurance only lasts for a certain number of years as agreed upon with your insurance provider when you took out the policy.

How long does life insurance take to pay out?

In the event of your death, a cash lump sum payment is made to your loved ones. However, before they can receive this money, they will need to make a life insurance claim.

To do this they will need to provide some information to your insurance provider, such as:​

• The name of the policyholder
   

• Policy number
   

• The policy document (certificate of insurance that should have been issued when the policy was purchased)
   

• Cause of death (this will be explained on your death certificate, which can be supplied by a funeral director or the General Register Office)

The timeframe of when the payout is received can typically range from a few days to a month. In some cases, the payout can be delayed if the cause of death is unclear or an autopsy is required. Providing your family has all the documentation needed to make a claim the process should be fairly quick.

Tip - When you take out a life insurance policy, keep your documents together in a safe place and let your loved ones know about the policy too, so should they ever need to claim they will know where the information they need is. 

Another factor to take into consideration is if the policy was written in trust. In this case, the process typically is much quicker because the proceeds of the policy shouldn’t have to go through the process of probate. Learn more about putting your policy in trust here.