We are going to continue introducing to you the useful frequently asked questions. We are sure this questions and answers can help you get the best insurance quotes that suit you.
I am already ill. Can I still take out life insurance?
It can be tricky to find affordable life
insurance if you have a pre-existing medical condition, especially if
it’s serious. Some insurers will turn you down flat; others will exclude
the condition. For example, if you have diabetes, the policy would not
pay out if you were to die from the disease. You would, however, be
covered if your death was not related to your condition.
There are a number of specialist
insurers that offer life cover to people with pre-existing conditions,
but you should be prepared to pay a higher price because of the higher
risk of a claim.
Can older people buy life insurance?
Life insurance premiums rise with age,
so older people will almost certainly pay more for cover. However, it is
still possible to take out life insurance when you are in your 50s.
Some firms even accept the over 50s without any medical or health
questions.
Can I insure my partner?
Many couples take out joint life
insurance so they only have to deal with one set of documents. The
premiums for joint life cover can also be cheaper than for two single
life policies. However, it’s worth bearing in mind that joint life
insurance pays out only once, on the first death. If the surviving
partner then wants to arrange their own life cover, it will be more
expensive as he or she will be older and possibly in a poorer state of
health.
Can the policy pay out a regular income rather than a lump sum?
Yes. If you opt for family income
benefit, your beneficiaries will receive a regular income on your death.
It’s often easier to manage a regular income than a lump sum because
you don’t need to worry about investing the money or any management
fees. As noted, premiums are also typically cheaper because the longer
you live, the less the insurer has to pay.
For example, if you took out family
income benefit to provide a regular income of £30,000 a year for 20
years and died in year two, the insurer would have to pay £30,000 a year
for 18 years. But if you died in year 18, it would only have to pay the
income for two years.
Will my family have to pay tax on any life insurance payout?
The proceeds of any life insurance
policy are free from income and capital gains tax, but they are
potentially liable for inheritance tax (IHT). However, it’s easy to
sidestep IHT by writing the life policy ‘in trust’. It will then go
directly to the beneficiaries and will not form part of your estate when
you die. Find out more here.
Can I make changes to my policy?
You can usually make amendments to your
policy, though it might result in a higher premium. You should also keep
your insurer up to date with any changes to your circumstances,
otherwise you could invalidate the cover. It’s a good idea regularly to
review your life insurance to make sure that it continues to meet your
needs, particularly if you get married, move house, or have a baby.
Are there any common exclusions?
Always read the small print of any life
insurance policy so that you understand the level of cover and the
exclusions. Many insurers will not pay out if you die as a result of
alcohol or drug abuse or suicide. It is also difficult to get cover for a
pre-existing medical condition, or if you die as a result of a
dangerous sport or hobby.
What is critical illness cover?
Critical illness insurance pays out a
tax-free lump sum if you are diagnosed with one of a list of serious
conditions during the policy term. Insurers commonly offer critical
illness alongside life insurance and it can be cheaper to take out
combined cover. However, you should be aware that a combined policy
usually pays out only once. So, if you claim on the diagnosis of a
critical condition, you will not be able to claim again when you die.
Are there any other policy add-ons?
You can add ‘terminal illness’ cover to
most life insurance plans. You would then receive the payout if you were
diagnosed with a terminal illness. ‘Waiver of premium’ is another
common add-on and pays the premiums on your behalf if you cannot work
due to illness or injury.
How do I cut the cost of life insurance?
Older people pay more for life insurance
so it makes financial sense to arrange cover as early as possible – in
your 20s or 30s rather than your 40s or 50s. You can also help to lower
premiums by improving your health and lifestyle. So, give up smoking,
lose weight and head to the gym!
Another money saving tip is to shop
around. Premiums vary from insurer to insurer so you can often save
money if you compare prices. It’s easy, too, with MoneySuperMarket’s
free independent comparison service. We can help you get a great deal on
your life insurance in a matter of minutes.
