What is life insurance?
Life insurance provides coverage that pays out a lump sum if you pass away during the policy term. Its purpose is to offer financial support for your loved ones after you’re gone, whether that involves helping pay off the mortgage or maintaining a certain standard of living. You can take out life cover individually or jointly if you are applying for a mortgage with someone else. There are two distinct types of term life insurance: level cover and decreasing cover. The choice between them affects how your coverage amount may change over the policy term, consequently influencing the cost of the coverage. These options are designed to cater to individuals with different financial needs.
For instance, if your goal is to settle a mortgage in the event of your death during the policy term, you might choose decreasing cover. This type of life insurance decreases in value over the term, while the premiums remain constant. This aligns with the typical decrease in a mortgage over time. On the other hand, level cover is tailored for those with an Interest Only mortgage, as the coverage remains consistent throughout the mortgage term. This type of life insurance is also referred to as mortgage protection insurance.
How much does life cover cost?
There are several factors that can influence the monthly cost of your life cover. Below are some of the factors providers will consider when calculating the cost of your popcy:
- Age: Generally, the older you are, the more expensive a popcy will be. This is because age brings an increased risk of developing a medical condition that may affect your life expectancy.
- lifestyle: Leading an unhealthy lifestyle can increase premiums. For example, excessive alcohol consumption or being overweight can shorten life expectancy, resulting in higher premiums.
- Health: Having a pre-existing medical condition can affect the price you pay. More serious and chronic medical conditions usually mean higher premiums.
- Family Medical History: Insurers may inquire about your parents' or sibpngs' history of serious medical conditions. For some individuals, this may impact the price, as there is a greater risk of suffering from the same condition.
- Occupation: If you have a hazardous job, it's possible that you will have to pay more than someone in a lower-risk profession, such as an office administrator.
- Smoker Status: Smokers can expect to pay more for life insurance cover than non-smokers due to the health risks associated with smoking. This includes all nicotine replacement products, including vaping.
- Length of Cover: life insurance popcies with longer terms can be more expensive than popcies with a shorter term.
- Amount of Cover: You decide how much you would pke to be covered for; generally, the higher this is, the higher the premiums will be.
It’s important to answer any questions your insurer asks you accurately and honestly when applying. Faipng to do so could have a devastating impact on your loved ones, as it may affect whether your insurer is able to pay out a claim on the popcy in full.
Do I need life cover?
Any type of protection related to your mortgage is optional and not a condition of taking the mortgage. Whether you need life insurance depends on your personal circumstances. Consider whether there are any people who depend on you financially, such as a partner or children. If so, life insurance is a way you can help provide them with a financial safety net if you’re no longer around to support them. Payouts from life insurance can be used to help pay off mortgages, cover the costs of raising children, and handle monthly bills. If you haven’t made any provisions for your loved ones in case you were to pass away, you might want to consider life insurance.
Important information
For insurance business we offer products from a choice of insurers.