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What to ask when considering life insurance

Questions to ask yourself about life insurance

Most insurance is designed to protect you from financial loss like theft, accidental damage or even a large vet’s bill, but life insurance is different. It’s designed to protect the people who depend on you financially if you were to die and couldn’t support them any more. If you’re considering taking out life insurance to protect your nearest and dearest, here are a few questions to ask yourself before making any decisions.

1. Do I need life insurance?

If another person depends on you financially in some way, for example, school age children or a partner who relies on your income, then the answer is probably yes.

And don’t underestimate the importance of life insurance for a stay at home mum or dad. Think about all the duties you currently provide that would need to be funded somehow if you were no longer around. You can see just how much your efforts add up to using our ‘mum’ salary calculator.

Life insurance for mums - mother with baby helps son with homework

2. What type of life insurance is right for me?

There are a few types of life insurance to choose from and which is right for you will depend on your personal situation and your intentions.

Simply speaking, there are two main categories of cover:

Term insurance

This is a life insurance policy that pays out if you die during a set period of time, usually from 5 to 40 years. No money will be paid out if you die outside of the term. Term insurance can be broken down further into level, decreasing and family income benefit:

  • Level term insurance The premium stays the same and the amount paid out also remains unchanged. People often take level term insurance if they have people that depend on them financially — like a partner or children
  • Decreasing term insurance Usually taken out to cover the outstanding amount on a repayment mortgage. The amount paid out when you die is relative to the balance of your mortgage. So, as the balance on your mortgage decreases, so does the amount the policy will pay out. Premiums stay the same throughout the term
  • Family income benefit Family income benefit pays out a regular, monthly cash sum to your family should the worst happen. This is to help cover the household bills and other payments until the end of the term

Whole of life insurance

This type of life insurance policy has no time limit and will pay out no matter when you die.

Life insurance protects family — young couple hold their son

3. How long do I need cover for?

This depends on your personal situation and why you need the policy. For example, you may want your policy to last until the mortgage is paid off or your children are old enough to take care of themselves.

4. Do I need life insurance if I’m already covered through my work?

If you already have life insurance with your employer, known as death in service benefit, you may not need another policy as long as you stay in the same job. However, it’s worth checking whether it provides enough cover to meet all the financial needs of your family if you weren’t around.

Your employer also has the right to review the level of cover they provide you with and as death in service benefits cannot be assigned to a certain person (and Trustees may use their discretion in payments), your dependants may not get the proceeds that you had originally thought. An additional life insurance policy could be a useful way to make up any shortfall.

5. How much life insurance do I need?

This is an important question that only you can answer because everyone’s situation is different. Start by thinking about how long you want your policy to last and what you want it to cover.

Work out how much money comes in each month and how much goes out. Look at your bank statements and savings and don’t forget small but important outgoings like the kid’s clubs and classes.

Also think about how losing you would impact childcare and other domestic duties. Whatever your role in the household, there are likely to be financial implications if you were no longer around to contribute.

A girl climbing on an indoor climbing wall

6. How much can I afford to pay?

Very simply, the more cash you want to be paid out, the higher the premiums will be.

It’s natural to want to leave all you can for loved ones, but how much money you provide needs to be balanced against what you can comfortably afford to pay for the cover. Premiums must be paid each month throughout the lifetime of the policy and the most likely outcome if you were to stop paying, is that your cover would be cancelled and you wouldn’t get any money back, so be realistic.

7. What can I do to lower the cost of life insurance?

The cost of life insurance is based on risk. The more risky the insurer considers you to be, the more you’ll pay.

If you decide to take out life insurance, do so sooner rather than later if possible. The younger and healthier you are, the more cover you’ll get for your money.

Finally, think carefully about how much life insurance you actually need and how long for. Remember to take savings and investments into account as they could help reduce the payout you’ll need.

Life insurance health risk – Overweight man exercising

8. What if I became seriously ill?

Life insurance pays out if you die, but not if you’re diagnosed with a serious illness. If you’re concerned about the possible impact of this on your family’s finances you could consider adding critical illness cover as an extra benefit on a term life insurance policy (or consider alteratives such as income protection cover).

Most critical illness insurance covers conditions such as heart attack, stroke and certain types of advanced cancer, provided they meet the specific criteria set out in the policy terms and conditions. For example, a heart attack depends how severe it was and a stroke may only be covered if it results in permanent, debilitating symptoms. Always check exactly what’s covered and look for further details that might affect your right to claim, such as how serious the diagnosis needs to be. Never assume two products are the same.

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). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

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?

The funeral services are arranged and provided by Dignity Funerals Ltd which 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.

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.