Why do I need life insurance?

Are there different types of life insurance?

Will the cost of life insurance vary for different people?

What process will I go through when applying for my policy?

If I don't die before the end of my insurance plan do I get any reimbursement?

I have a pre-existing medical condition, will this affect my policy and premiums?

Can I get joint life insurance with my partner?

What is critical illness cover and will it be included in my insurance policy?

Does smoking affect the cost of my policy?

Q. Why do I need life insurance?

A. A life insurance policy is an effective way of helping to ensure financial stability for your loved ones should the worst happen to you. Also known as life assurance or term assurance, a life insurance policy is usually considered for the following reasons:

• Replacing lost income of the primary earner.
• Covering mortgage repayments after death.
• Covering your children’s education fees.
• Repaying debt and helping to create financial security for those left behind.

N.B The term assurance is also used because it assures an event that will definitely happen, which in this case is death. The term insurance is used as it is not definite that you will die within the set term of your policy. They mean the same thing in terms of your policy.

Q. Are there different types of life insurance?

A. Yes there are several different types of life insurance. The most clear-cut is Level Term Insurance. It involves a set amount of money that is paid out to you as a lump sum should you die within a specified fixed term. E.g. 20 years. This amount does not change. Other types include:

• Mortgage Term Insurance / Decreasing Term Insurance:
  This will help towards paying off your outstanding mortgage balance if you die before your mortgage is repaid. Cover is usually set up to match the mortgage term and over time the level of life insurance provided by the plan falls to reflect your reducing mortgage loan – so you’re only paying for the cover you need. If life cover is purchased to protect a mortgage then the lender may require the policy to be assigned.
• Renewable Term Insurance: Allows you to extend the policy at the end of the set term without any health reassessment.
• Increasing Term and Index Linked insurance are both designed to keep the sum assured in line with inflation and cost of living.
• Whole of Life Insurance: As long as premiums are paid, this policy will pay out the sum assured whenever death occurs. The policy is not restricted to a specific term and may have a cash-in value.

Please note that Level Term Insurance and Mortgage Term Insurance are the only types available for quote comparison on our site.

Q. Will the cost of life insurance vary for different people?

A. Yes. Insurance providers assess the risk linked to each individual. This basically means how likely it is they will have to pay out in the event of death. With this in mind - age, occupation, health and lifestyle are all contributing factors to the amount you will pay for insurance. For example, an 80 year old chain-smoking sky diver should expect high premiums. It is very important to be completely honest about your personal details or your policy could be deemed invalid.

Q. What process will I go through when applying for my policy?

A. The majority of applications are processed on-line or by tele underwriting. As each insurance company has a different underwriting system, there are different processes attached to different policies. Most policies involve an on-line application which will either be accepted immediately or in some cases your application may be referred to underwriters. With other policies, your on-line application may be followed by a telephone call to complete the final stage of the application process. Some policies could also have the option to download an application or request a postal application. All applications are subject to acceptance by the insurance company.

Q. If I don’t die before the end of my insurance plan do I get any reimbursement?

A. Usually, the money put into your plan is purely for insurance and there is no savings content or cash-in value at any point. However, there are whole of life policies that can accumulate a cash value over time. Some of these policies can be surrendered, and the policyholder would then be entitled to at least a portion of the cash value.

Q. I have a pre-existing medical condition, will this affect my policy and premiums?

A. Any life insurance provider will need to assess the risk involved in offering you a policy. With this in mind, it’s likely they will want to assess your general state of health before deciding on what premiums to charge for the cover you require. This could be done through a medical examination and contact with your GP. Having a medical history could possibly result in exclusions, higher premiums or the insurer being unable to offer you cover- but not in every case. Every medical case is different and definitions between providers can vary – so, it’s well worth shopping around and discussing your circumstances directly with a provider.

Q. Can I get joint life insurance with my partner?

A. There are joint policies available that will cover both you and your partner. Joint insurance is usually available on a ‘first death’ basis, which means only one pay-out is made upon the first death in the partnership. After this pay-out, the remaining individual is no longer covered by the policy. Some policies may work on a joint life ‘second death’ basis in which both deaths in the partnership would be covered and a pay-out made on the second death.

Q. What is critical illness cover and will it be included in my insurance policy?

A. A critical illness as opposed to a terminal illness is one where there is chance of survival. There are rare occasions where people recover from terminal illnesses, but generally speaking they have a life expectancy and critical illnesses do not. However, the seriousness of the critical illness may considerably disrupt your ability to work and cause financial difficulties. If you are suddenly struck down with a critical illness, having this cover will help ease financial pressures during this difficult time. Your insurance policy will outline the terms and conditions applicable to a critical illness insurance pay-out.
Critical illness cover may already be included in your policy but if not, it can normally be added as an additional benefit to a Level Term Insurance or a Mortgage Term Insurance policy. The premium will increase if the critical illness option is added. Critical illness cover can also be purchased as a stand-alone policy.

Q. Does smoking affect the cost of my policy?

A. Insurance providers weigh up the likelihood of you making a claim and then price the policy appropriately. As medical research has shown that smoking can significantly damage your health and potentially lead to life threatening conditions – being a smoker is likely to raise your premiums.
With most policies, to be counted as a non-smoker you must have been genuinely cigarette-free for the 12 months before making an application. Being dishonest about this could result in an invalid policy.