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10 things to know about life insurance

Here are 10 of the most useful things to know when you’re considering life insurance to protect your family.

The 5 minute lowdown on life insurance

Let’s face it, life insurance probably isn’t the most interesting of subjects to have to read up on. But it is an important one, especially if there are people out there who depend on you financially. In short, having a policy in place could make all the difference to your family’s livelihood if you passed away and they had to get by without you.

Life cover protects loved ones - Father holding son

That’s why it’s worth taking the time to learn about how life insurance works and the options available, so you can decide how best to protect your family. In this article, we run through 10 useful things to know about life insurance to help you understand the subject better.

1. If someone relies on you, think about life insurance

If you have a partner, children or any other person who relies on you, you should give life insurance serious thought. Think about it. If you died, how would they cope without the money you bring in? Could they keep the roof over their heads and maintain the lifestyle they have now? Life insurance could provide a lump sum pay-out or regular income to give them some financial security.

2. Think about life cover even if you don’t bring home the bacon

Never underestimate the value of a stay-at-home parent to the family. If you work out the cost of everything you do for the kids and the home on a daily basis, it will probably equate to a healthy annual salary. Use our mum salary calculator to see for yourself.

3. Get started sooner rather than later

Whether you own your own home or are a new parent, it’s never too soon to take out life insurance. But there is the unfortunate possibility of leaving it too late and leaving loved ones with any financial burdens that come with losing you.

4. There’s more to life insurance than the money

First and foremost, life insurance pays out cash in the event of your death, helping provide for your family.

But importantly, it could also give you and your loved ones peace of mind. Simply knowing that if the worst were to befall you, the household budget would not be put under too much pressure, creating space to help them come to terms with your loss is reassuring for all concerned.

Sand drawing of mum and 2 kids with dresses made of leaves

5. There are two main types of life insurance

Term life insurance

This is a policy that pays out only if you die during the duration of the policy – typically between 5 and 30 years. With a level term policy, the premiums and cover amount are guaranteed never to change. With a decreasing term policy, your cover amount goes down year on year. This is because the sum of money that will be paid out should you die is also decreasing over time. This is similar to the way a repayment mortgage decreases and so it makes it a popular way to cover a mortgage. In the event of your death, your loved ones may be able to pay off your outstanding mortgage. Typically, decreasing term life assurance to accompany a repayment mortgage is cheaper than a level term policy but you can get quotes for both and decide which best suits your needs.

Whole of life insurance

Whole of life cover guarantees to pay out on death, whenever that happens to be. It literally covers you for the whole of your remaining lifetime. Whole of life insurance is more expensive than a term policy.

6. Weigh up joint life versus single cover

Many life insurance policies can be purchased as a single life or on a joint basis. If you and partner want a chunk of cover each, it may make sense to consider separate policies. Some joint policies only pay out once on the first death and then the policy ends, leaving the surviving partner without cover. If in doubt, compare the small print and get a life insurance quote for joint and single life cover, there are so many options available you will be able to find the right solution for you.

7. Understand what you’re committing to

You commit to two fundamental things when you apply for life insurance. To be honest with the insurer on your application and to pay what’s required when required.

So, always be totally upfront about your health and lifestyle when asked. Withholding information or being economical with the truth could result in your insurer refusing a claim, potentially leaving your beneficiaries without the settlement that they may have been expecting to rely on. And always pay your premiums when asked to, which is usually every month throughout the policy term. If you stop paying for any reason, you risk your insurer cancelling your policy.

8. Work out how much cover you need and for how long

No one knows you better than you. The contribution you make financial or otherwise, what you want to protect, the needs of your dependants and, what you can afford to pay each month are all unique to you.

Deciding how much life insurance you need, and the number of years you need it for, isn’t as complicated as it might sound. Use our simple life insurance calculator, to help you estimate the right amount of cover for your personal circumstances.

9. You can add critical illness cover to your policy

Some insurers offer the addition of critical illness protection to your life insurance when you apply, and pay for both together. Critical illness cover usually pays out a percentage of your life cover if you're diagnosed with a serious medical condition, such as a heart attack, stroke or certain cancers during your policy term, to help you and your family get by. When taking out life insurance, bear in mind that only certain diagnoses trigger a cover payment and this will vary depending on your provider.

10. Things change so review your cover regularly

As you go through life, things will inevitably change and that could affect the amount of cover you need. For example, a change in job, a marriage, children, a bigger mortgage or divorce. Make sure you review your life insurance and are confident you have enough cover for your current situation. If not, you might be able to take out an additional policy to top up your cover.

SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, equity release, pet insurance, car insurance, home insurance, ISAs and Will writing services.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife?

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

Dignity Funerals Ltd arranges and provides the funeral services. Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.