Life Insurance FAQs

Is there an eligibility for life insurance?

Most life insurance programs don’t issue a policy unless you complete a thorough medical checkup. This checkup will include the doctor determining your health condition and any drug/smoking habits.

In certain scenarios, there is guaranteed acceptance. This is the case with the Over 50s Life Insurance. It means that you won’t be prevented from getting the policy.

There is also a minimum and maximum age at which you can get life insurance. The minimum is 18 years while the maximum is 85 in most cases.

What does life insurance do?

Life insurance basically releases a said amount to your family in the event of your death. This amount can be released as single lump sum or as non-taxed salary depending upon your policy. This payout helps your family in managing their finances after your death.

What is the difference between life insurance and life assurance?

Life insurance lasts a specific term, normally between 10-25 years. Your family is entitled to a payout within these years. However, life assurance doesn’t have year limits. Basically, your family will get the designated amount whenever you die.

Is the amount my family gets same in term life insurance?

Term life insurance can be of two types: level and decreasing. In level term insurance, your family gets the agreed amount no matter when you die in the policy term. While in decreasing term insurance, the payout decreases over time. The latter variant is mostly chosen when you are looking to secure your mortgage payments.

Is a life insurance payout liable to be taxed?

Life insurance payouts are not normally taxed by the British Government. However, if they are not written in trust then they are accounted for in the deceased’s estate. If this estate exceeds GBP 325,000, then it is liable to be taxed. It is taxed under the Inheritance Tax clause of HMRC which is levied at 40%.

How do I know the correct insurance term for me?

Life insurance is there to provide a financial cushion to your family if you die. Therefore it is advisable to account for the time period of mortgage and loans in your term calculations. It is also beneficial to get a term that covers the time period remaining in your kids becoming 18-years-old or graduating from college.

How do I know the right insurance amount for me?

As in insurance term, there are several things you need to consider to get to the right insurance amount. These include, but are not limited to, outstanding loans, number of dependents, mortgage payments and your salary. Normally it is 5-10 times your salary.

Are life insurance premiums fixed?

Premiums are usually fixed for decreasing term and level term life insurance. They are also fixed for family income benefit policy. However, some companies may offer reviewable premiums. These premiums go up or down after a review at specific time intervals. These intervals are usually either 5 or 10 years.

Are there any policy add-ons?

Some items can be added to your life insurance policy for added benefits. These includes the likes of terminal illness cover, critical illness cover and funeral cost cover.

Are there any exclusions to life insurance payouts?

Many companies may not release the amount insured if:

  • You die from alcohol or drug abuse.
  • You take part in risky activities like hot air ballooning and paragliding.
  • You accidently die in a country outside of the European Union.
  • You die in the situation of a war or rebellion.
  • You die taking part in a criminal act.
  • You commit suicide or inflict bodily harm on yourself.

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