Discount auto insurance. How and where to buy life insurance - Money Advice Service

Life insurance payments can start from just a few pence a day depending on how much cover you want, but also on the likelihood of anything happening to you. But even if you’re high risk, you don’t need to accept the first life insurance offer that comes along – it always pays to shop around. Buy life insurance online.

How much does it cost?

How much you pay for life insurance depends on the amount of cover you want (i.e. the amount you want paid out upon your death) as well as the likelihood that you will die in the near future.

For this reason, the amount you pay for life insurance every month (your premium) will depend on a few things, including:

hobbies (for example, extreme sports)

whether you smoke or have previously smoked

health (your current health, your weight, your family medical history)

job (some professions carry a higher risk than others and might mean you have to pay more each month).

The older you are and the higher the level of cover you’re looking to purchase, the more likely it is that your insurer will ask your GP for additional medical information, or ask you to undergo a medical examination.

The amount of cover you need will depend on:

take home pay or income from other sources.

How much cover do I need?

You can work out how much cover you need in three quick steps.

Step 1: First add up:

Your debts: your total mortgage and other debts, such as credit card debts or personal loans.

Expenses you want the insurance to cover: your basic monthly outgoings and any other costs, such as child maintenance, school or university fees. You might want to leave a lump sum for someone, or use it to cover your funeral costs.

Step 2: See what kind of cover you already have

For example, if you’re employed, your benefits package might include a ‘death in service’ pay-out – a lump sum that’s a multiple of your annual salary at death.

Step 3: Calculate the cover you need

When you have these two figures, take away the benefits or cover you already have from the total amount your dependants need.

The result is the amount of life insurance cover you should take out. Alternatively, a common rule of thumb is to multiply your annual income by 5 or 10.

Now think about the length of time you want the policy to last.

California life insurance

You might decide that it should end at the same time as your mortgage, when your children finish full time education, or up until you die.

Life insurance example

John (42) and Judith (39) have a joint household income of £41,000 per year.

They have an outstanding mortgage of £213,000 which they expect to pay off in 18 years.

They also took out a £5,000 loan to purchase a car. Their basic monthly outgoings are £1,000 (£12,000 per year).

What you already have

Through his employer, John has death in service cover worth four times his annual salary.

A total of £100,000. Judith is self-employed and does not have a similar benefit.

Calculate the cover you need

They decide they need enough life insurance to cover their mortgage, their car and their basic annual outgoings.

John’s death in service cover is enough to cover the car and living costs, so they take out an 18 year life insurance policy to cover their mortgage.

Life insurance is often paired with another product, such as income protection insurance.

Should your policy be inflation linked?

You don’t need your policy to be inflation linked if you just want to cover your mortgage.

If you want to continue your family’s current lifestyle then it ought to be linked to inflation.

What happens to the monthly payments if I can’t work?

For a small extra cost you might be able to buy ‘waiver of premium’ cover.

If you can’t work because of illness or injury this will cover your monthly payments, but usually only after you’ve been off sick for at least six months.

Another option is to take out a different kind of insurance policy that will help cover your outgoings if you get ill.

Where to go for quotes

To find the best value on cover, compare as many offers as possible.

independent financial advisers

Cheap insurance

retailers including major supermarkets

insurers that don’t sell through comparison site

comparison sites – use a variety of sites to make sure you look at a wide range of offers

your mortgage provider – most offer life insurance automatically when you take out a mortgage, but you might be able to find a better deal elsewhere.

Using a broker

If you’re not sure about what level of cover or type of insurance policy you might need, you might want to use an insurance broker.

These market experts can often help you find the insurance product you need at a good price.

There might be a charge for this so always check how (and how much) they will charge when you first speak to them.

Use our FAQ guide, which covers the basic questions that you might want to ask an adviser, or the questions they will ask you.

Be honest about your medical history

Although the vast majority of claims are successful, it’s important to give your insurer all the information they ask for.

When a claim is made, insurers will look at your medical history and if you didn’t answer truthfully or accurately in your application, or didn’t disclose something, they might not pay out.

Buying a policy

Read the small print

Read the small print before you take out the policy so that you know what you’re buying.

Make sure you know exactly what is and isn’t covered. If you see something you don’t understand, ask the insurance provider, or your insurance broker or financial adviser.

Exactly what is excluded (what isn’t covered) can vary by insurer. When you’re comparing offers, you must read these definitions so you can be sure you’re comparing similar policies.

Changing your mind

Once you’ve bought an insurance policy you have a right to change your mind within 30 days and get a full refund.

If you already have life insurance, is it worth switching?

If you’re young and/or healthy, you might find it easy to get a better deal.

But as you get older or develop medical problems, you might find it’s cheaper to stick with a policy you bought when you were younger.

When to get life insurance

hop around and remember to check with your existing provider too.

In any event, if you do decide to switch, don’t cancel your existing policy until the replacement policy is fully set up and you have made the first monthly payment.

Once you have cancelled a policy, you can’t change your mind.

Keeping your cover up to date

It is inevitable that your life insurance needs will change.

You should review your policy to make sure your premiums are competitively priced and that you still have the right amount of cover.

you’ve had another child

your partner has stopped working

you’ve taken out a new mortgage.

On the other hand, if you change jobs and your new benefits package includes a higher ‘death in service’ benefit, you might be able to decrease your level of cover.

Do you need income protection insurance? This type of insurance provides regular payments if you are unable to work due to illness or injury.

Do you need payment protection insurance? Payment protection insurance will help you keep up with payments if you can’t work because you’re ill, had an accident or made redundant.

Do you need short term income protection? This solution provides short term cover to help you pay for essential outgoings if you find yourself unable to work.

Do you need critical illness insurance? This type of policy will provide you with a tax-free ‘lump sum’ if you’re diagnosed with a serious illness covered by your policy.
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