Question 1

What does life insurance actually cover?

Accepted Answer

Life insurance pays a tax-free lump sum (or regular income, for family income benefit) to your beneficiaries if you die during the policy term. The four main UK options are: level term (fixed sum assured throughout), decreasing term (sum reduces in line with a repayment mortgage, so it is cheaper), whole of life (pays out whenever you die, often used for inheritance tax planning), and family income benefit (monthly tax-free income to your family instead of a lump sum).

Question 2

Which conditions does critical illness cover pay out for?

Accepted Answer

Standard UK critical illness policies cover the big three (cancer, heart attack and stroke), which account for the majority of claims. Most providers also list 40 to 80 additional conditions, including multiple sclerosis, Parkinson's disease, kidney failure, major organ transplant, motor neurone disease, total permanent disability, blindness, deafness, third-degree burns and benign brain tumours. Definitions and severity thresholds vary between insurers, so the exact wording matters more than the headline number of conditions.

Question 3

What is the difference between income protection and critical illness cover?

Accepted Answer

Critical illness pays a one-off lump sum on diagnosis of a defined serious illness. Income protection pays a regular monthly income (usually 50 to 65 percent of your gross salary) if you cannot work due to any illness or injury, after a chosen waiting period. Income protection covers a much wider range of conditions including back pain, stress and mental health issues, which critical illness usually excludes. Many people hold both: lump sum for big shocks, monthly income for everyday inability to work.

Question 4

I get death-in-service from my employer. Do I still need personal life cover?

Accepted Answer

Employer death-in-service is usually a multiple of salary (commonly 2x to 4x), paid only while you are still employed there. It stops the day you leave, change jobs or are made redundant, and it cannot be transferred. It also rarely includes critical illness or income protection at a meaningful level. Personal cover sits with you for life, is portable between jobs, and lets you choose the sum assured and term that match your mortgage, family and lifestyle.

Question 5

What factors affect the premium?

Accepted Answer

The main pricing factors are: age (premiums rise sharply each year you wait), smoker status (smokers typically pay roughly double), health and medical history, family medical history, weight and BMI, alcohol consumption, occupation (manual or high-risk jobs cost more, especially for income protection), hobbies (climbing, diving, motorsport), the sum assured, the term length, and the type of policy. Adding critical illness or waiver of premium increases the cost. Decreasing term is cheaper than level term for the same starting sum.

Question 6

How much life cover do I actually need?

Accepted Answer

A common rule of thumb is 10x your gross annual salary, or enough to clear your mortgage plus 5x to 10x your income on top. A more accurate method: add up your outstanding mortgage, other debts, funeral costs (around £4,000 to £5,000), and the annual cost of running the household multiplied by the number of years your family would need support (often until the youngest child is 21). Subtract any existing cover and savings. The remainder is your target sum assured.

Question 7

What does writing a policy in trust mean and why do it?

Accepted Answer

Writing your life policy in trust means the payout goes directly to your nominated beneficiaries rather than into your estate. The benefits are significant: the money is usually paid out within weeks instead of waiting months for probate, it falls outside your estate for inheritance tax purposes (currently 40 percent above the nil-rate band), and it bypasses any creditors of the estate. Most UK insurers provide free trust forms and it takes 15 minutes to set up. We strongly recommend it for almost every policy.

Question 8

Should we take a joint policy or two single policies?

Accepted Answer

A joint life first-death policy is cheaper because it only pays out once, on the first death. The downside is that the surviving partner is left with no cover and has to take out a new policy at an older age and possibly worse health. Two single policies cost more upfront but pay out twice (one on each death), stay with each person if the relationship ends, and let you tailor the sum assured to each partner's income. For most couples with children, two single policies are the better long-term choice.

Question 9

What is indexation and do I need it?

Accepted Answer

Indexation (also called index-linked or inflation-linked cover) automatically increases your sum assured each year, typically by RPI or by a fixed 3 to 5 percent. Premiums rise in line with the cover. Without it, a £200,000 policy taken out today could be worth much less in real terms in 25 years. Indexation is worth considering on level term and family income benefit policies, especially long ones. It is less relevant on decreasing term because the cover is designed to track a falling mortgage balance.

Question 10

What is the difference between guaranteed and reviewable premiums?

Accepted Answer

Guaranteed premiums stay the same throughout the policy term (subject only to indexation if selected). Reviewable premiums start lower but the insurer can increase them at set review dates (usually every 5 or 10 years) based on claims experience, your age and medical advances. Guaranteed premiums cost more at the start but give certainty for budgeting, which usually wins out over a 25-year term. Almost all of our recommendations use guaranteed premiums.

Question 11

When does the policy actually pay out, and how often do claims get paid?

Accepted Answer

UK insurers paid out 98 to 99 percent of life claims, 91 to 92 percent of critical illness claims, and 79 to 84 percent of income protection claims in recent ABI figures. Life cover pays on death (or terminal illness diagnosis with less than 12 months to live). Critical illness pays on confirmed diagnosis of a defined condition meeting the policy wording. Income protection pays after the chosen waiting period (usually 4, 13, 26 or 52 weeks) and continues until you can return to work or the policy term ends. The biggest cause of declined claims is non-disclosure on the original application.

Question 12

Roughly how much does this cost?

Accepted Answer

Indicative monthly premiums for a healthy non-smoker aged 35 taking 25-year level term cover: £200,000 life only from around £8 to £12 per month, £200,000 life plus critical illness from around £30 to £45 per month, £2,000 per month income protection (52-week waiting period) from around £20 to £30 per month. Decreasing term is roughly 30 percent cheaper than level term. Smokers typically pay double. Premiums rise sharply with age, so delaying often costs much more than the policy itself.

Question 13

Why use a broker rather than buying direct from a comparison site?

Accepted Answer

Direct and comparison-site policies are usually identical products at identical prices (insurers do not discount through brokers in this market), but the advice and structuring is what changes the outcome. A broker recommends the right type of policy for your situation, sets it up in trust, completes the application accurately to avoid future claim disputes, packages medical disclosures correctly, and stays involved at claim time. We are independent, FCA regulated and paid by commission from the insurer, so there is no fee to you.

Question 14

Will I need a medical exam?

Accepted Answer

Most applications are accepted on the basis of the application form and online health questions alone, without any medical exam. For larger sums assured (typically above £500,000 to £1m), older applicants, or where you disclose specific conditions, the insurer may request a GP report (no cost or effort to you), a nurse visit at home or work, or blood and urine tests. The insurer pays for any tests. Honesty on the application is essential: undisclosed medical history is the most common reason claims are declined.

Question 15

What is typically not covered?

Accepted Answer

Common exclusions include: suicide in the first 12 to 24 months of a life policy, pre-existing medical conditions you did not disclose, illnesses or injuries from hazardous activities you did not declare (e.g. skydiving, motor racing), drug or alcohol misuse, self-inflicted injury, and on critical illness, conditions that do not meet the precise severity definition in the policy wording. Income protection usually excludes voluntary unemployment and short-term absences within the waiting period. We walk you through every exclusion before you commit.

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