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Five things you need to think about before taking out life insurance

Thu 27 Feb 2020

life family
Losing a loved one can have devastating financial consequences but having life insurance can really help in difficult times.

We know it’s not a nice thing to think about, but providing some financial protection could help your loved ones deal with the grief, stress and unexpected costs that death can bring.

Here are five things to think about before taking out life insurance:

1) Work out what cover you need

To see how much cover your family will need, start by looking at your monthly outgoings, (mortgage/rent, bills, debt repayments) and how much you contribute towards these. Then look at the costs involved following a death. The average cost of a funeral in the UK is currently £3,757. Having a life insurance policy not only provides financial protection for your loved ones, but could also help them pay for any costs associated with a funeral.

Need to pay Inheritance Tax? (IHT) Inheritance tax is a tax on the estate (the property, money and possessions) of someone who’s died. Whether you have to pay it depends on a number of factors including the value of the estate. For more information https://www.gov.uk/inheritance-tax

2) Adjust for future inflation

Inflation typically makes household bills more expensive over time, so it’s worth considering this when looking at the amount of cover you need. For example, a pint of milk in 1990 cost 29p and yet today costs around 51% more at 44p*. There are policies that provide ‘increasing cover’ where the amount payable on death increases each year in line with inflation.

3) Affordability

Look at what type of insurance you really need as there can be a huge difference in quotes for example a ‘whole of life’ insurance policy can cost more than a policy that covers a specific term.

4) What sort of payout do you want?

It’s also important to consider how to replace a regular income when someone dies. Most Life insurance policies pay a single amount of money on death, whilst a Family income benefit insurance can pay out a regular income until the policy ends.

5) Speak to a trusted Protection Advisor

It’s important to get the right cover that meets your needs. Life insurance usually only covers death, so if you want protection that covers your income or illness then you’ll need to consider other protection policies that can do this.

If you’re not sure what type of insurance you want or what level of cover you might need then an insurance broker can help. Some brokers just provide non-advised sales, others will review your circumstances and suggest an insurance product that meets your personal needs. Some may charge you for the advice, others may get commission from the lenders once you take a product out – so it’s worth asking them upfront.

FREE advice on how to protect your loved ones

As a member of the Police family you get exclusive access to Police Mutual’s FREE Life and Protection Advice Service. Our advisors search the whole of market to find the most suitable protection for you and your family. As a broker we provide unbiased advice and get paid commission by the insurer if you buy a policy - so you don’t pay anything for the advice.

One call is all it takes to get started. For free advice on how you can best protect your loved ones call now on:

01543 441 630


*Source: Office for National Statistics, †Money Advice Service

Mortgage Excellence Plc, trading as Police Mutual, is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 03527577. Registered office: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6QS. For your security, all telephone calls are recorded and may be monitored.

Type of article: Articles
Category: Protecting my family

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