Covering You and Your Loved Ones – What Does Life Cover Mean?

• Home
• Resources
• Covering You and Your Loved Ones – What Does Life Cover Mean?

Life insurance can feel off-putting. In society today, the entire concept of insurance has become tainted with negativity. Most of us feel forced into it – the legal requirement of car insurance, for example, or the importance of home buildings insurance for those with a mortgage. Insurance that we can choose to leave – well, why not just leave it?

In the beginning, however, insurance was never a nasty term and those who organised it were seen as people doing helpful and caring favours - not some sort of money-grabbing scam artist.

Here at Quick Quote Protect, we understand how much negativity surrounds insurance in the modern world, and we’re here to help, confident that once you understand the benefits of life cover, you’ll be picking up the phone to get us to find you a policy that suits you and protects your loved ones.

What is life cover?

With all the financial commitments we are tied to as adults – mortgage, utility payments, providing for our children, the impact that can come if an unexpected death occurs stretches far beyond the emotional turmoil of grief and into the tangible reality of debt.

Without some sort of help, having one of the family providers pass away can descend into a spiral of financial instability that leaves those already struggling with their loss in fear of losing their home and way of life.

Life cover is a financial security blanket that makes sure your passing doesn’t mean the destitution of your loved ones.

How does life insurance work in the UK?

At its core, life insurance policies are very simple: each month you pay the insurance company an agreed amount (the premium) and if you die, they pay a defined lump sum to your beneficiaries to give them the financial security they need.

What are the benefits of life cover?

Outside of the reassurance that your family are not going to be left struggling when you die, there are many other additional benefits that can form part of your life insurance plan, from pay-outs when you become ill and unable to work, to income protection that looks after you during periods of hardship.

Some life insurance policies even come with free gym membership, air miles or cinema tickets!

What type of life insurance do I need?

There are four main types of life insurance. At Quick Quote Protect, we have in-depth articles on each for further understanding, but in brief:

Whole of Life cover: This easy-to-understand policy type covers you for the rest of your life, paying out a set lump sum when you die. The premiums are quite high, but the cover is comprehensive and you need never worry about it ending.

Level Term Assurance (LTA): One of the main types of cover, LTA pays out a set lump sum if you die within the agreed term (for example, 20 years). Unlike Whole of Life cover, LTA does come to an end and is typically used to cover people through their working lives, or during the period where they are responsible for children.

Decreasing Term Assurance (DTA): Another common cover, DTA works in a very similar way to LTA however the final lump sum is tied to a mortgage or other long-term financial commitment. As the balance on the mortgage lessens, so does the assured sum on the insurance until the term comes to an end. Due to its decreasing nature, premiums for DTA cover are very affordable and offer an amazing deal for security regarding the family home.

Over 50s cover: A dedicated deal for mature individuals, over 50s cover is a type of whole of life cover that does away with much of the medical questions and policy adjustments, giving people cover for funeral costs and other expenses without prejudice.

What does life insurance cover you for?

While standard life cover simply results in a lump sum payment given to your beneficiaries upon your passing, variants do exist. These include:

Critical illness cover (CIC): An addition to your main life insurance policy which provides a large financial payout should you become critically ill or injured and unable to work.

Income protection (IP): An insurance policy to help you maintain a regular level of income if you become sick. Income protection can be used in addition to any sick pay scheme provided by your work, or the national statutory sick pay.

Family income benefit: Rather than receiving your life insurance payout as a single sum, family income benefit is paid out over time, simulating your income over subsequent years.

Investment linked whole of life cover: Linking your insurance policy with an investment scheme, these policies allow you to draw from your life insurance cover, effectively giving you a tied-in savings account with good returns on your investment.

How is life insurance paid out?

A typical life insurance policy will be paid as a lump sum to the assigned beneficiary upon your death, however, it is possible to place your policy in trust if the recipient is below a certain age or may require help properly using the money.

It is also possible to set your policy as a longer-term family income benefit, meaning it pays out monthly to your family rather than as a lump sum.

You should make sure any beneficiary is aware of your life cover so that they can contact the insurer to make the claim at the necessary time.

How long do you have to have life insurance before you die? What does LI not cover?

For most cases, your life insurance will begin as soon as the policy is in place. Though it would be a tragedy, a life insurance policy will pay out in full should death occur as a quickly as an hour after the policy being completed.

Death by suicide is an exception that requires your policy to have been in place for a complete year before it will pay out.

Additionally, some policies have an exemption for specific clauses stated in your application – for example, your cover may not be valid if you die doing an extreme sport such as skydiving if it has been marked as an exclusion in your policy.

It is important that you are completely honest in your life insurance application. Over 97% of life insurance policies in the UK are paid out in full, and of the 3% that are rejected, most of those are due to a falsehood becoming evident from the time of application.

It is far better to have a valid life insurance policy that may cost a little more, than to have been paying premiums for years on a policy that will not pay out!

How much is life insurance?

Your premium will be calculated based on your specific circumstances. Young, healthy people will find themselves paying significantly lower monthly direct debits than older people who smoke and possibly overweight, for example.

Most life insurance policies have a premium that is set at the time of application. What this means is that the amount you pay per month won’t change even as you do (unless you cancel or redefine your policy). Getting life insurance while you are young has a massive impact and may well secure you exceptionally low insurance payments for life.

At Quick Quote Protect, we have successfully arranged cover for people from small £50,000 policies with a low £6 per month premium, to massive multi-million-pound payouts with premiums that cost a few hundred per month. The only way to get an accurate quote for yourself is to give us a call – our advisors will be able to take you through the steps quickly and efficiently to see what cover is on offer for you.

The main factors that affect the cost of your life insurance premiums are:

• The type of cover (whole of life, level term etc.)
• Your age
• Your health
• Your weight
• Whether or not you are a smoker

What is the average life insurance payout?

Just as the cost of premiums are variable based on circumstance, so too is the final payout. That said, at Quick Quote Protect we recommend that you look at cover which is ten times your annual salary – thus, if you earned £25,000 per year, we would look at £250,000 worth of life cover.

Which is better - term or whole of life insurance? What type of life insurance do I need?

Choosing the right type of insurance for you is all about understanding your specific circumstances. Our advisors will be able to talk you through all the possible packages, tailoring any final policy to fit perfectly.

The following chart will help you in understanding the different levels of cover:

Why is life insurance important?

Providing for those who you leave behind can weigh heavily on the mind. Life cover really goes to the core of what insurance should be about – ensuring the well-being of those who are suffering from an unfortunate circumstance that couldn’t be foreseen.

Do you really want to leave your financial commitments to your family when you are gone? Life insurance provides the financial security that gives them needed time to recover.

Where do I get life insurance?

For the best life insurance quotes, call Quick Quote Protect today. We compare all the major life insurance companies in the UK to find the best policy for you. No matter what your situation, our expert advisors will be able to work out life cover that suits you.

If you want a reasonably-priced life insurance deal with advice from compassionate and experienced experts, then give us a call or fill in our contact form to have one of the team call you back at a time that’s convenient to you.