Five things you need to think about before taking out Life Insurance

Thu 12 May 2022

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 £4,056. 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 the estate is liable depends on a number of factors including the value of the estate. For more information

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 2000 cost 35p and yet today costs around 31% more at 46p*. 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 prices for example a ‘whole of life’ insurance policy can cost more than a policy that covers a specific term.

4) 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 – so it’s worth asking them upfront.

Find an adviser

5) 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.


Protecting your loved ones couldn't be easier

With Royal London Life Insurance, protecting your family couldn’t be easier. A ’no fuss’ one stage application process by phone or online is all it takes. Cover starts from £7 per month and has Terminal Illness Cover included at no extra cost.

Find out more >

*Source: Office for National Statistics, SunLife cost of dying report 2022.

Police Mutual is a trading style of The Royal London Mutual Insurance Society Limited. The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL

Type of article: Articles
Category: Protecting my family

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