What is life insurance?
Life insurance pays a lump sum or income to your beneficiaries if you die during the policy term. Its primary purpose is to replace your income and protect your family's financial security. Key reasons to have it: paying off the mortgage so your family doesn't lose their home; replacing your income; covering ongoing financial commitments; funeral costs.
What types of life insurance are there?
Level term: fixed lump sum if you die within the term. Decreasing term (mortgage protection): payout reduces over time with your mortgage balance — cheaper. Whole of life: covers your entire life, guaranteed payout whenever you die — used for IHT planning. Family income benefit: pays a regular income rather than a lump sum — often more practical for income replacement.
How much life insurance do I need?
A simple starting point: 10x your annual income plus your outstanding mortgage balance. On £40,000 income with a £200,000 mortgage: £600,000 of cover. Adjust for your partner's income, number of dependants, employer death-in-service benefits, and other assets. A protection adviser can calculate a precise figure.
What affects the cost?
Age (younger is cheaper), health and medical history, smoking status (smokers pay roughly double), amount of cover, term length, and whether you choose level or decreasing cover. The best way to find competitive pricing is to compare the whole market through an independent adviser rather than going direct to one insurer.
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