If you own, or are planning to own, your own home, you should consider acquiring a life insurance policy. Most lenders will require you to have one in place to obtain a mortgage.

Even if you don’t own your own home, life insurance gives your family a financial safety net if you were to die unexpectedly. 

No one wants to imagine a time they won’t be around to look after their loved ones. By finding an affordable life insurance policy, you can be assured that your dependents will receive a lump sum after you die. The money can be used to pay off a mortgage, rental payments or any outstanding debts.

What are my life insurance options?

There are two types of life insurance – fixed term and whole of life insurance. A fixed term policy last for a certain number of years. If you die during this period, your dependents will receive a pay-out depending on the terms of your specific policy.

A whole of life policy lasts for the insured person’s lifetime, assuming that premiums are paid regularly. Premiums for whole-of-life insurance tend to be higher than for fixed term policies.

For either policy, your premiums will depend on your age and health status.

Some employers offer group life insurance which offers a lumpsum to the family of an employee if they die while employed by the company.

What are the benefits of life insurance?

The main perk of life insurance, of course, is the security and peace of mind. Knowing that your family won’t have to face financial stress is a reassuring feeling. Nevertheless, only a third of UK adults have a life insurance policy, and less than 50% of mortgage holders.[1]Perhaps one of the reasons so many people seem to put off life insurance is that they are not fully aware of the benefits.

Life insurance comes with some tax benefits. The money that your dependents receive with not be subject to income or capital gains tax. However, if your dependents receive more than £325,000 they may be subject to inheritance tax at 40%.

Some insurance companies pay a refund to life insurance holders who live past their life insurance coverage period, such as AXA Wealth. Others like Vitality offer discounts on gym membership and sports clothes as part of their life insurance packages.


[1] 60% of UK adults don’t have any form of life insurance – Harbour Wealth Limited