10 Life Insurance Facts You May Not Know

author image - cai

By Cai Bradley

on Monday 15 July 2019

Parents and young child holding hands in the countryside

Most people are urged to take out life insurance once they start having children or when they buy their first house, but it’s surprising how little the average adult in the UK really knows about it.

Here, we bring you 10 facts about life insurance that you may not know (and probably should’ve been taught at school!).

1. Life insurance could be subject to the dreaded inheritance tax…

Life insurance policies taken out to provide a financial support to your loved ones when you pass away are likely to be subject to inheritance tax, which is 40%! However, this inheritance tax is avoidable if you know your stuff.

2. …But you can put your policy in trust to avoid it

Writing your policy in trust is a proven method of avoiding the hefty inheritance tax bill, because your life insurance payout will not count towards the value of your legal estate.

The proceeds of a life insurance policy written in trust go directly to the beneficiaries, rather than your estate, and there’s no need to go through probate which makes the process far less time consuming.

3. You can write your life insurance ‘in trust’ for free

Writing your life insurance in trust is typically free, it costs nothing extra and it provides a whole range of benefits for you and your beneficiaries.

4. Indexing your life insurance will make it rise with inflation

£250,000 in 2019 is worth a good sized house, but who’s to say it’ll be worth the same in 20 years’ time? Index-linking your life insurance allows you to adjust the policy so that the pay-out keeps up-to-date with inflation, and its value when it is released will be representative of its value when you initially took it out.

5. Multiple life insurance plans could be more beneficial

More people are beginning to consider life insurance as a collection of plans, rather than just one single entity, and they’re reaping the rewards.

So, you could have a range of policies to cover different situations or possibilities – for example, you could have whole of life cover to ensure your funeral is paid for, decreasing term assurance to cover your mortgage, or income protection insurance to make up for a loss of earnings if you’re too ill or injured to work.

6. Decreasing term insurance is cheaper than a ­­­­level term plan

If your main reason for taking out life insurance is ensuring that your family home is not lost due to your loved ones no longer being able to pay the mortgage if you passed away, then your best option is to find a decreasing term life insurance plan.

This type of policy is perfect for ensuring your mortgage will be paid off, and premiums normally costs significantly less than a level term plan worth a similar amount.

7. The younger and healthier you are, the cheaper your policy will be

When people take out life insurance, they often wish they’d done it sooner. Younger and healthier people are generally offered cheaper premiums, so if you get cover while you can class yourself as both things, you’re likely to get a far better deal.

8. Some plans offer more than a cash pay-out – look out for additional benefits

There are plenty of life insurance companies out there that provide their policyholders with additional benefits to enjoy while they’re still alive – such as free cinema tickets each week, sportswear discounts, deals on gym memberships, and so on.

You could also take out a policy with additional funeral benefits, so your beneficiaries receive an extra 5-10% on top of your policy when you pass away to cover the cost of your funeral, or you may get a discount off certain funeral directors.

Every life insurance provider is different and comes with various benefits, so be sure to ask us at Unite Life for more information!

9. How you die is not as important as you may think

Most people generally assume that insurers will look for ways of getting out of releasing your pay-out, but that’s not the case at all.

Around 98% of policies are paid out, and the remaining 2% are typically those who provided incorrect or false information at the time of taking out the policy.

Regardless of how you pass away, whether it be a natural death, a natural disaster or an attack, your life insurance is very likely to be paid out (depending on the terms and conditions of your exact policy – always make sure you understand these fully).

10. Unite Life’s team of advisors could help you today, for free and with no obligation!

You can call us today for free with no obligation and we’ll help find you the best life insurance cover for your situation, or complete our simple contact form and we’ll be in touch at a time that’s most convenient for you!

08000 106 194

Unite Life can help you save on insurance – get in touch with us today!

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