Life insurance is one of those expenses that as a young adult you don’t even think or even know about, but when you start to consider buying your first home, or starting a family, the topic of life insurance comes up more often. We asked the team at Protect Line, a life insurance brokerage, to give us all the information you might need when considering a life insurance policy.

So, what is life insurance?

Life insurance is an insurance policy that pays out a lump sum to your dependents when you pass away.

Life insurance or life assurance. What’s the difference?

Life insurance is a term used for policies that have a fixed term. For example, you could pay for a policy which covers you for 10, 20, 30 years or more and if you passed away during the policy term, you would receive the set amount that you’re paying for.

Life assurance refers to whole of life policies – these do what they say on the tin – they’ll cover you for your entire life. Prices can vary between these two different policy types, so it’s recommended to speak with your broker to determine which may be more suitable based on your age, health and lifestyle.

What types of life insurance are there?

There are two main types of life insurance:

  1. Term assurance. This type of policy would pay out a sum to your dependents if you passed away during a set length of time. Depending on your policy the amount of the lump sum may increase, decrease or stay the same during the term.
  2. Whole of life assurance. This type of policy would pay out a lump sum at any point in your life when you pass away. These are normally the more expensive of the two types of policy, as there’s guaranteed to be a pay out at some point.

You can also get life insurance policies that protect you if you fall ill, known as critical or terminal illness cover.

Life insurance can vary depending on your age, health, whether you smoke and your general lifestyle. Some people can sail through getting the cover they need because they are young and have no underlying health or medical issues, but for others it can often feel like a chore to get through the process. It may be more suitable for people who are over 50 to look at a policy that is not medically under-written. It all depends on your circumstances.

What can life insurance be used for?

Life insurance can be used for many reasons. It could protect the family home to provide a lump-sum mortgage repayment in the event of the key breadwinner passing away. It could be used to provide funds for your children to go to university or maybe the first deposit on their own homes. Some families use it to pay for funeral costs, and others use it to take a holiday after the stress of dealing with a loss. Life insurance can be used for a variety of different reasons, but ultimately it's down to you how you choose to use the money.

Do you need life insurance and critical illness cover?

Life insurance isn’t the same as critical illness cover although policies can often be sold together. A life insurance policy will only pay out in the event you pass away, whereas critical or terminal illness insurance would offer you protection if you were to be diagnosed with an illness. It’s important to consider that if you were diagnosed with a critical or terminal illness and could no longer work, would you want protection in place to cover your mortgage and other expenses, or do you have a sufficient savings plan in place?

Should you get a single life insurance policy or a joint life insurance policy?

This varies based on your circumstances. It’s important to note that a joint policy will only pay out on the first death – so if your partner were to pass away, you would no longer be covered. This is why some couples instead choose for two single policies so they’re both protected regardless.

I get insurance through my work, do I need a separate policy?

Possibly. If your insurance through work covers ‘death in service’, you may receive a pay-out that’s a multiple of your salary if you pass away while you’re employed with them. It’s important you consider whether that would provide you enough cover, and that if you leave that job, you’ll no longer be covered.

Why is life insurance important?

Life insurance is important to consider because it can protect and provide for your loved ones after you’re gone.

Directors of Protect Line, David and Jo Brewers said:

“We started Protect Line because as parents ourselves it was scary to think what would happen to our kids if we were to pass away unexpectedly. Life insurance is one of those products where more often than not, most people don't recognise the value of having that protection in place. We insure our cars, our homes, and even our phones... but when it comes to insuring our own lives, somehow this isn't a top priority for people. Fundamentally that's why Protect Line exists - we want to talk with parents and guardians about why protection is so important."

Protect Line is a non-advised brokerage that is able to provide the facts about cover, and not to give their opinion on who they think is best, or be influenced by commission, or bonuses to tell you to be insured with one particular insurer. They offer level term, decreasing term, whole of life, non-medical and critical illness protection options to their customers.

Content in this blog is not an endorsement of Protect Line. If you’re looking for life insurance brokers, you can see what our members think on our top-rated table