Why do I need Life Cover?

Life insurance is a very common policy for people to have in place, but there are many different reasons that they may have taken the policy out.

Covering debts within a household is the most common prompt for people to consider life insurance, especially mortgages on a family home. In a ‘typical’ household of two parents and some children, many individuals like the peace of mind of knowing that if something were to happen to one of the parents then the mortgage would be repaid, and the family home protected. Whilst it used to be a requirement of some mortgages to have this cover in place, it is not compulsory as the lender will have a legal charge over the property and has the capacity to repossess if the mortgage is not repaid.

Protecting a family and ensuring that there is sufficient capital or income into the household is another very popular reason to consider life insurance. When an individual is employed, were they to pass away that regular salary will cease and often create a difficult financial situation for a household. Similarly, if an individual has a pension income and passes away, depending upon the type of pension the income can cease entirely, or reduce by 50% very often. With everybody’s budgets being stretched by rising costs currently, having your income reduce very abruptly can be a very hard situation to manage through.

Life insurance is about making households financially robust, so that if the worst were to happen, they can continue to meet their outgoings and not suffer financial distress at a time of great emotional upheaval.

I’ve been declined life insurance, what can I do?

Many people with certain medical histories will have experienced having life insurance be declined and assume from this that they cannot get cover. There are dozens of different life insurance providers in the UK, and many types of policy, and the fact that one insurer has declined your application does not mean that you cannot access life cover.

Having an experienced, qualified, and whole-of-market adviser really pays dividends to make sure that you can get the best terms available. There are certain brokers who specialise in pre-existing conditions and will understand your background medical condition and the information that will be needed to provide to the insurer to get the best result.

If you find that a ‘normal’ medically underwritten type of life insurance is not available to you anywhere, then there are more specialist non-medically underwritten policies that exist which will be able to offer life cover.

Should I write my insurance into trust?

A good financial adviser should be able to help you write your life insurance into trust, which is an important and often overlooked part of the process. A trust is the mechanism which ensures that your beneficiaries (those who you wish to get the proceeds of your life insurance) do receive the monies, and it gets to them quickly and tax free.

When an insurance policy is set up, it should be gifted into the correct trust, with a trustee appointed (somebody who can help pay the money out should you claim). You then get the option to appoint specific individuals who get the monies.

By writing the policy into trust, this effectively means that you no longer legally own the plan, and if you pass away this means that the proceeds do not form a part of your estate. Policies that are not written into trust and therefore form part of an estate can be subject to lengthy delays, and the monies may not ultimately go to who you wish them to. If you do not have a valid will in place, this will almost certainly be the case.

Here at Fish Insurance, we have partnered with Watts Mortgage & Wealth Management to provide Life Insurance and critical illness cover, designed to give you reassurance that your family and those you care about would be looked after financially, should something happen. Click here for more information.