No one wants to think about the worst happening, especially if you are about to move into your own home for the first time, or thinking about starting a family.
While starting these new and exciting adventures, it’s also time to think about how to protect your loved ones should anything happen to you. One of the best ways you can do that is with life insurance.
The following information should not be taken as advice. If you have any concerns about which type of life insurance is right for you, please contact a financial or mortgage adviser.
Life insurance provides financial support for your partner and any children, in the event of death and some providers will cover being diagnosed with a terminal illness too. Dealing with the death of a loved one is hard enough without adding money worries to the situation.
Taking out life insurance means that, should the worst happen, your loved ones will have one less thing to think about. Life insurance pays out a cash amount that can help with everything, whether that's to help pay off the mortgage, support children going to university, or simply making sure they have enough to live on. The amount of cover you have and how long you have it for is up to you, subject to certain limits.
Taking out a mortgage may be the first time you are asked to consider life insurance – this is because you are committing to borrowing and repaying a significant amount of money.
While you're under no obligation to take out life insurance when taking out a mortgage, there are many advantages. Most importantly, it can help your partner to continue repaying the mortgage.
Life insurance covers:
Life insurance doesn’t cover:
You can also add our Critical Illness cover to your Life Insurance, and take out Income Protection if you wish.
Critical Illness pays out a lump sum if you are diagnosed with one of 38 conditions, including a heart attack, cancer, Parkinson’s disease and Alzheimer’s disease. There’s also further conditions where the lower of 25% of your total amount of cover up to £30,000 will be paid and nine enhanced conditions where you’ll receive extra.
Income Protection, on the other hand, is to be used in the event of an accident or sickness that means you are off work for a significant period of time. Income Protection pays a percentage of your income each month, over a set period of time.
There are several types of life insurance to choose between. The one you pick will be dependent on your personal circumstances and what your provider offers.
There are typically two main types, which are:
There is no end date for the policy, it will continue for the duration of your life (as long as you make the payments) and will pay out whenever you die. LV= does not offer these policies.
Term life insurance for a specific amount of time. When this ends you will no longer be covered.
LV= life insurance policies are all for a specific term, these include:
In the event of your death, level cover will pay an amount at claim which will always be the same - whether the claim is made in the first year, or during the last year of the policy term. This can be used to help pay off the mortgage or be left to your family.
The cover amount (which you can choose) and premiums are fixed for the term, which is also up to you and can be anywhere from five to 50 years. It gives you the certainty of knowing what your payments are and what the amount at claim will be, but does mean that it won't benefit from inflation.
Each year the money you owe on your mortgage and other loans will reduce and this cover reflects that by reducing the amount you are covered for each year too. You choose the amount, the premium won’t change and it can be from five to 50 years.
This is often cheaper than level cover life insurance. If you plan to change how much you pay on your mortgage or have an interest-only one, this may not be the best option.
Then, you can choose between:
You choose whether to take life insurance out on your own or with your significant other, or you can both take out separate policies.
You can take out a policy together, which can be cheaper. Once one claim has been made and paid out, the policy will come to an end and the other person will no longer be covered.
LV= life insurance starts from as little as £5 a month but this can vary depending on the provider. The price you pay will be dependent on several factors though, including:
You can take out life insurance with LV= at any time between the ages of 17 and 84.
You may be likely to consider it when taking out a mortgage, to protect this large investment and ensure your family can continue to repay it, should the worst happen.
It’s not only those with a mortgage that should consider life insurance. If you are renting, you’ll still leave your partner or family without an income to pay rent and bills.
If you already have a family – or are considering starting one – you may also be thinking about life insurance. This way you may be able to take care of your family financially, should you not be around to support them.
This is entirely up to you and based on your individual circumstances, including how many dependents you have.You may want to ensure you have enough to repay the mortgage as a minimum, and you may also want to consider adding in any other loans you have or larger bills and costs that will need paying.
For many people, life insurance is worth it for the peace of mind with knowing your family could be protected for the future. Whether you take our life insurance depends on your personal circumstances.
If you have taken out life insurance to cover the mortgage repayments, then you can choose for it to end when the mortgage has been paid off. If this is the case, you may want to take out decreasing cover life insurance.
This isn’t the only reason you take out this insurance, you may want it to continue until your children are older, if the money is to help with the cost of raising them. Likewise, if it is to protect your partner who will have ongoing household expenses, you may want it to continue.
The payments for life insurance can start from as little as £5 a month. However, the cost is worked out on an individual basis, so the exact price you pay will vary from person to person.
The length of time is up to you. It can vary from five years to 50 years. You may choose to have it for the duration of your mortgage, or until your children are at an age where they can financially support themselves.
Once you have older children, who have moved and have their own income and have paid off, or are close to paying your mortgage, then may not need life insurance.
It’s important to note, however, that the policy must end before you are 90 and if you were to die outside of term of your policy, no money would be paid out.
If you think it’s time you took out a life insurance policy then get a quote Life insurance could offer you peace of mind that your family may be protected financially, if the worst occurred.