What Does Life Insurance Cover You For?

Each type of policy explained...

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By Cai Bradley

on Wednesday 18 September 2019

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What does life insurance cover? Life insurance – or life assurance – is a way of securing your loved ones financially in the event of you passing away or if you become too ill to work, depending on the type of policy you have in place.

Life insurance can cover any remaining mortgage payments that would, without life insurance, be left to your spouse or loved ones if you passed away within the agreed policy term. Life cover can also cover your children’s finances at university, and even the cost your funeral.

As long as you choose the best life insurance policy for your situation and needs, purchasing cover is a smart investment and a useful way of having a financial plan in place should the worst happen.

How does life insurance work?

To begin, you choose the best type of insurance for your situation and agree on a policy with a life insurance provider – whether it’s whole of life, term life insurance, or critical illness cover.

You then pay monthly premiums, in turn for a lump-sum payout if you pass away or become too ill to work.

There are different types of life insurance policies available to suit all potential policyholders and each policy’s conditions vary quite considerably.

At Unite Life, we are a life insurance broker, meaning that we can find the best life insurance policy deal suited to you from all of the policies available with our partnered providers – some of the best ones in the UK. Contact us today, obligation-free, to find out more and to get a life cover quote today.

What does whole of life insurance cover?

Whole of life cover will provide you with financial protection for the entirety of your life – there is no end date, as it lasts until you pass away.

When you pass away, your loved ones – the beneficiaries – will receive a lump-sum payout irrespective of when that may be.

It provides policyholders with complete peace of mind, knowing that their loved ones are pretty-much guaranteed to be covered financially when they eventually pass away.

Whole of life insurance can also cover your family’s inheritance tax, which you can find out more about in our guide to legally avoiding inheritance tax here.

What does term life insurance cover?

Unlike a whole of life policy, term life insurance will only provide cover for a set amount of time – hence the ‘term’ label. You will therefore only receive a payout if you pass away during the length of term that you agreed on when you took out the policy – which could be 25 years, for example.

It may not seem as smart an investment as whole of life insurance, but it certainly can be if your situation suits.

Term life insurance is especially useful for those looking to cover their mortgage payments, as it can be set to start and end in conjunction with a mortgage or loan.

The end-date can also be set to cover your children’s childhood and teenage years, as the term could be arranged to end on your youngest child’s 21st birthday, for example.

The premiums also tend to be cheaper than whole of life insurance, so you get a more affordable level of cover during a period of time that meets your requirements.

What does critical illness insurance cover?

Critical illness insurance is a type of policy that covers you if you are ever unfortunate enough to contract a specified critical illness, such as cancer or a stroke, etc. Critical illness cover is there to help you financially, to help towards paying for things like treatment and time off work while you try to recover.

It can either be purchased as a standalone policy or as additional cover alongside your basic life insurance.

The critical illnesses covered in your critical illness cover will be specified within your personal policy’s conditions and they do differ from provider to provider, so make sure you fully understand what illnesses your policy covers you for - if you want a certain illness to be included, let your provider know when you’re arranging the terms of your cover and they will be sure to design a policy to suit your needs.

Critical illness insurance generally covers illnesses or health conditions such as:

  • Some forms of cancer
  • Heart attacks
  • Strokes
  • Blindness
  • Organ failure
  • Multiple sclerosis
  • Alzheimer’s disease
  • Loss of limb(s)

Just remember that all UK providers’ policies differ in terms of the illnesses that they cover, so always make sure you’re aware of the exact illnesses you are covered for. See 'Critical Illness Insurance Pros and Cons' for a full list of benefits and potential drawbacks. 

What is not covered by life insurance?

Although life insurance is a great way of planning for the future and providing yourself with peace of mind, there are some eventualities and situations that would not warrant a payout. For example, if you lied about being a smoker on your life insurance application and you died from a smoking-related illness, or if you contracted an illness that wasn’t covered by your standard policy.

Some policies may also exclude certain cases of suicide, while others will exclude death as a result of dangerous activity, alcohol or drug use, and any illegal activity. Life insurance exclusions differ with each policy, so be sure to talk to your provider about it before agreeing to purchase cover.

You should always expect some exclusions within your life insurance policy, but make yourself aware of any before you take out a policy in order to avoid any unpleasant surprises for your loved ones left behind.

What type of life insurance policy is best for me?

The honest answer is that it depends, which is why you should consider giving our trained advisors a call here at Unite Life, even if all you want is some generic insurance advice.

Choosing which type of life insurance to take out can be difficult at first, but once you’ve got your head around the benefits of the three main policies – critical illness cover, term life insurance and whole of life cover – you should start to get a better idea of which would best suit your situation.

You may find that:

  • Whole of life insurance is best for providing for your family when you’re no longer around
  • Term life cover is best if you want to make sure your mortgage is paid off
  • Critical illness cover is best if you want to secure yourself and your family financially if ever you contract a specified critical illness.

Of course, it’s not always straightforward and each person’s situation is different, meaning the best policy for you is entirely dependent on your needs.

Be sure to get in touch with Unite Life today and we’ll be happy to discuss your life insurance options under no obligation whatsoever.

There are other related plans available to help you financially, such as over 50s life insurance and income protection (including income protection for the self-employed). For more information, read our guides:

Unite Life insurance quotes

Everyone wants cheap life insurance, but it’s important that you do not choose your policy based on its price alone – you need a policy that is going to be worth the premiums you pay and one that will provide you with the financial cover that you and your loved ones need.

At Unite Life, we work with the best life insurance companies in the UK to find the most suitable cover for your situation and needs, in order to ensure that you get the most out of your premiums.

For assistance in finding the best life insurance policy for you, get in touch with us here at Unite Life by completing a short contact form and one of our friendly advisors will be in touch at a time most convenient for you.

Feel free to browse our range of articles if you would prefer to learn some more about life insurance first, and for a quick lesson about the policies, check out our 10 facts about life cover that you may not know!

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