Why do you need life insurance?

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.

What is life insurance?

Life insurance is an insurance policy that pays out a lump sum to your dependents if you pass away during the policy term.

What types of life insurance are there?

Life insurance is a term used for policies that have a fixed term. 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, your lifestyle and your medical history. 

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. It could be used to provide funds for 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. 

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 protection if you were 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 or joint policy?

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

If you get insurance through work, do you need a separate policy?

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. Weigh up whether that alone would provide your loved ones with enough protection. If you leave that job, you’ll no longer be covered.

What does a life insurance broker do?

Life insurance is important because it can protect and provide for your loved ones after you’re gone. But it's important to get the best policy for your circumstances. That's where a broker can help. They'll ask everything they need to know to enable them to search the market and find your personalised life insurance options for you. It can save you a lot of time and avoid any confusion when trying to compare policies yourself.

Should you get life insurance through a broker?

You don't have to use a broker to find your life insurance policy, you can search for products and apply yourself. Using comparison sites may help you narrow down your choices, but a broker will be able to find the options that are best for your personal circumstances.

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's 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.*

How do you know which is the best life insurance policy?

You can search for a life insurance policy using comparison sites. They will show you different policies from insurers, so you can compare features, prices and any additional benefits. But, these results don't tell you what it's actually like to be a customer. Dealing with a life insurance claim after losing a loved one can be incredibly upsetting and overwhelming, so choosing an insurer who has a great track record for customer service, could be just as important as the monthly premium.

With Smart Money People you can read life insurance reviews from real people so you know who is recommended and who needs to do better for their customers. You can also leave a review of your own if you want to share your experience of life insurance companies.

*Content in this blog is not an endorsement of Protect Line.