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Life Insurance Questions

Why do I need life insurance?

Whereas most insurance policies are aimed at protecting you and your property, life insurance is necessary to protect the people who depend on you from the financial losses which would occur if you were to die or become seriously ill. Life insurance is also required by some mortgage lenders, so that they have the security of knowing your mortgage will be paid back if you die before the end of the loan period.

Is life insurance just for people with mortgages?

Life insurance policies can be used for a wide number of reasons. If you are only interested in protecting your mortgage payments, then specific mortgage protection life insurance policies are available for this.

Can I save money on my life insurance even if I have an existing policy?

The cost of life insurance has fallen dramatically over the last five years, meaning that it may well be possible to reduce your monthly premiums substantially without having to reduce your cover levels.

Are there any circumstances in which a life insurance policy will not pay out?

Many policies will include certain obvious exclusions such as suicide, or any situation which the insured person has not told the insurer about. For example, if you were insured as a non-smoker, and started smoking, then your life-insurance policy would be void, unless you told your insurer and started paying a higher premium.

Should I consider my funeral arrangements as part of my life insurance policy?

It is certainly advisable to consider the likely costs of funeral arrangements when you are working out the overall benefits you wish to insure yourself for. This maybe a more sensible option than taking out a separate pre-paid funeral plan, which can be very expensive.

More on funeral plans

I am young and fit, and not planning to die soon. When should I get life insurance?

The key issue is to consider life insurance when you have someone who would lose out financially if you were to die. This might be because:

  • You have a dependent spouse
  • You have children who are dependent on your income
  • You have an ageing parent or relative who depends on you for support
  • You have another loved one you want to provide for
  • You have business or estate planning needs
  • Your pension and savings are not enough to protect your loved ones from the rising cost of living.