Protecting your family with Life Insurance
The purpose of life insurance is simple… it will provide a lump sum of money to your loved ones if you die. This cash payout can be used to help cover living costs and outgoings such as the mortgage and other everyday expenses.
For you, life insurance provides peace of mind that if the unthinkable did happen, your family would have a financial safety net. For them, it could be the difference between struggling to cope financially and being able to maintain the way of life they enjoy now.
And the good news is times have changed. Where once life insurance was known for lengthy applications involving intrusive questions and medical examinations, there are now more straightforward options available to you, like Family Life Insurance.
Types of life insurance
Term life insurance pays out if you die within a specific timeframe called the ‘term’. Whole of life insurance pays out whenever you die, which is why premiums tend to be higher. Over 50 life insurance is similar in many ways to Whole of Life Insurance, but doesn't require a medical and cash sums tend to be smaller.
How does our Life Insurance work
Important things you should know
- As long you pay your premiums when due and provided accurate information when you applied, the cash payout is guaranteed to the policy beneficiaries, if you die within the term. This is important to remember because if you don’t, your cover would be cancelled and your family wouldn’t be entitled to the cash payout.
- At the end of the term your cover ends, you stop paying premiums and no money is returned to you. Remember, life insurance is protection for the ‘what if’, not an investment or savings plan.
- ‘Level’ simply means the premium and cash payout are both set at the start of the policy and never change.
- The premium you pay depends on your age, the amount of cover you need, how long you want cover for and your answers to some health and lifestyle questions.
Life insurance — who needs it?
The reality is, unless you’re completely free of responsibility with no children or anyone else dependent on you, you’d be wise to consider having life insurance in place.
Whether you’re a breadwinner or a full time parent, your role within the family is vital. And if you weren’t there, the value you bring would have to be replaced somehow and that will inevitably cost money.
It’s probably easy to see the importance of replacing lost income, but don’t underestimate the value of a stay-at-home parent. Think about how much it would cost to pay someone else to take care of the many jobs they perform every day, from driving the kids around to keeping the house in order. A lump sum from a life insurance policy could help cover a whole host of expenses.
Starting a family
Financial security becomes a priority at a life changing moment like this. If either partner were to die, the surviving partner would have to cope alone and may have to change their current circumstances to support the family.
For example, the main income earner may have to stop or cut back on work to look after the children. Or someone who cares for the kids full time may have to get a job to keep up with the family’s outgoings. In either situation, having a life insurance payout to help fund childcare costs could make all the difference.
Taking out a mortgage
A new home is exciting but with it comes big responsibility. If you don’t keep up mortgage payments, your mortgage lender has the right to repossess your home. If you died, having life insurance to help pay the mortgage or clear the debt completely means your family won’t risk losing the family home.
It’s not easy to contemplate, but if you were to die your loved ones would have to find the cash to pay for a funeral, on top of everything else they’d have to cope with. A life insurance payout would help them recoup some, or all of the money.
It might be more affordable than you expect. The cost to you is determined one of two ways:
1. The premium you pay each month
You could decide how much you can comfortably afford to pay each month and how long you need cover for. These factors plus your age and your answers to some health and lifestyle questions are used to set the amount of cover to be paid out if you die during the policy term.
2. The amount of life cover you want
Alternatively, you could calculate how much life cover you’d like and decide how long you want it for. these factors plus your age and your answers to some health and lifestyle questions are used to set the premium you’ll need to pay each month of the policy term.
Critical illness cover
If your family depends on your salary to make ends meet, critical illness insurance can provide an extra layer of financial protection to your life insurance in case you’re unable to work due to a serious illness.
Critical illness insurance can be combined with term life insurance and paid for together in one monthly premium.
If you choose to add critical illness cover to SunLife family life insurance and you have a heart attack or stroke, or are diagnosed with certain types of cancer during the term of your policy, 25% of your life cover would be paid out. The remaining 75% would be paid out if you went on to die before the end of the term.
How much cover do you need?
Everyone’s needs and priorities are different and how much cover you need — the sum insured — will depend on your personal situation.
Keeping a roof over the family’s head is a top priority, but the mortgage isn’t the only thing to consider protecting.
Think about all aspects of your household finances:
- Utility bills, broadband and council tax
- Running the car
- Leisure activities and holidays
- Clubs and other memberships
- Out of school activities such as music or ballet lessons
- Anything else you'd like to continue if the worst happened to you.
Don’t forget to allow for the cost of extra help that may be needed, such as childcare.
Also take into account any savings that could be used to support your family. This can reduce the amount of cover you need.
Use our life insurance calculator to help work out how much cover may be needed to support your family, if you weren’t there to do so.
How long should you take cover out for?
This is up to you. You might want to be covered until your mortgage comes to an end. Or you might decide to cover yourself until your children reach 18 or finish in full time education.
Your age when you take out life cover may also affect the term you choose. For example, with SunLife Family Life Insurance, you can choose a term between 5 and 40 years, as long as the term ends by your 80th birthday.
Frequently asked questions
Family Life Insurance is provided by Scottish Friendly.
We can't decide for you though, we can only tell you how our products work, with you in mind. For impartial advice you can visit unbiased.co.uk to find an Independent Financial Adviser in your area. You may be required to pay for any advice that you receive.
No. With level term insurance, like SunLife Family Life Insurance, premiums stay the same throughout the term of your policy and are guaranteed never to go up.
The cash sum is also guaranteed never to change, so bear in mind that inflation will reduce its value over time.
Provided you always pay your premium when due, provided accurate information on your application, life insurance is guaranteed to pay out, if you die while the policy is in force.
Strictly speaking no, but they do tend to be used to mean the same thing. Technically, life insurance will pay out if you die whereas life assurance pays out when you die.
If you already have death in service cover as an employee benefit, it may be worthwhile checking whether the level of cover it provides would be enough for your family’s needs if the worst were to happen. Don’t forget, if you leave the job for any reason, this cover will end.
With SunLife Family Life Insurance, you get an instant decision on whether you’ve been accepted. If you are, you’ll be covered straight away.
You can specify who you want to benefit from your life insurance policy, through your Will or by using a Trust form if the insurance provider offers this.
No you can’t. If you stop paying or cancel your life insurance policy, your cover will end and you won’t get any money back.
It’s up to you and will depend on the level of cover you would like and what you can afford.
If you take out separate life insurance policies, you will each be entitled to a cash payout if you die while your policies are in force.
A more affordable option is what’s known as ‘joint life first death’ cover, like SunLife Family Life Insurance. This is when two people can be on the same policy but the policy will only pay out once, when the first person dies. After this, the policy would end and there would be no further payout if the second person died within the original term.