UK Life Insurance Cover FAQ

Frequently Asked Questions

How long should my life insurance coverage be?

How long will your dependents be dependent on you? For instance, if you are getting life insurance because you want to ensure that your children's needs are provided for, even when you die, then you should program your insurance in such a way that it will last until your children have their jobs and are no longer financially dependent on you.

What riders should I get?

There are various kinds of riders and each rider is designed to meet a certain need or concern. Please note that each rider added to the policy will also mean additional premiums. Here are some riders to choose from:

  • Waiver of premium rider. If you are concerned about your ability to pay the premiums in case of disability, get this rider.
  • Accidental death rider. If you are concerned about getting into an accident, then this rider is for you.
  • Critical illness rider. This rider provides a portion (or, in some cases, an amount equal to the sum insured) in the event that you are diagnosed with a critical illness that is listed in the policy.
  • Return of premium rider. This is commonly for term life insurance policies. If you want to ensure that you do get something out of your term life policy, you can get this rider.

Which is better – to have a joint life insurance plan or to have two separate plans?

Basically, joint life insurance plans covers two individuals – usually the husband and the wife. There are joint life policies where the insurance proceeds will be paid to the surviving spouse. Then, the coverage stops and the surviving spouse will not be covered by that policy anymore. There are also some joint life policies that will pay when both Insureds have died. The proceeds will be paid to the beneficiaries.

As to what is better, it really depends on your situation and budget. A joint life insurance plan is cheaper than getting two separate plans. However, having two separate plans will mean that each spouse is covered with life insurance, providing better protection for beneficiaries.

After the basic expenses, I have very little left for life insurance? Should I buy it and consider it forced savings?

Although life insurance answers a real need, you should also evaluate your financial capability. To make the most of your life insurance, you need to be sure that you can continue paying the premiums. Otherwise, your policy will lapse and eventually be terminated. One option, if you don't have a lot of cash is to buy term life insurance with a conversion option. That way, when you can afford to buy another policy in the future, you can convert your term insurance policy into a permanent life insurance policy without having to submit proof of insurability. This will result in premium savings.

I have tried getting coverage, but my insurance application was rejected. What should I do?

Life insurance companies do and will assess your risk before they approve of the application. They need to do this. Otherwise, there will be adverse selection – which is the tendency for those who have a short life expectancy to want to buy insurance. To prevent this, as well as to help set your premiums, insurance companies follow an underwriting process.

Now, if your application has been rejected, you can look into other sources of life insurance, particularly group life insurance, where underwriting rules are less stringent. This can be your employment or through social or civic organizations.

You should also consider the reasons why you were rejected. Perhaps it is something that you have control over – such as your lifestyle (i.e. smoking habit) or your occupation. If you can change these factors, perhaps the insurance company may reconsider your application.

Do I need to undergo a medical exam to buy life insurance?

It depends on how much insurance you're buying and what type of policy you have, as well as the underwriting rules of the insurance company. There are some plans that are considered non-medical. These usually only allow small amounts of insurance but do not require you to undergo a medical exam. All you need to do is answer a few medically-related questions in the application.

There are also insurance plans that require the examination of the doctor. This will help the insurance company to determine how much premiums they will charge.

Another hybrid would be a policy that starts off as non-medical but then when there are "yes" answers to some underwriting questions, it puts a flag on the application and requires the applicant to undergo medical examination.

There is no need to be afraid of medical exams, though. This will invariably involve just taking your medical history and having basic medical tests.

Can I withhold some information about myself in the application? I consider some of the questions too personal for my comfort.

You should make full disclosure when you answer your application. Meaning, you should not leave any crucial information out of the application. The same goes during your medical exam. Providing false answers or leaving out information will be considered misrepresentation. The insurance company reserves the right to cancel your policy or to deny your beneficiary's claim if it discovers that there is misrepresentation. However, there is a time limit for this. There is a contestable period where the Insurance Company is given the chance to cancel the policy. After that, they will pay the death benefits regardless of whether there is misrepresentation or not.

Should I also get insurance coverage for my spouse and children?

It is highly recommended that you get coverage for the spouse. After all, both of you contribute to the family budget. Even if the spouse is a stay at home parent, there is still a financial loss involved upon the death of that spouse. Your first priority as a parent should be to ensure coverage not just of yourself but also your spouse.

As for the children, it depends on whether you can afford it or not. After all, you don't depend on children for financial support. That said, you can consider the idea of buying insurance for your children if you are concerned that he or she may be uninsurable in the future due to a sickness or accident.

I found a life insurance policy that is cheaper than the one I have. Should I terminate my current policy and buy the cheaper one?

First, check first if you're actually comparing apples to apples, and not apples to oranges. Does the new policy have the same level of coverage in terms of the sum insured and the riders?

Now, if you are sure that both policies offer the same level of coverage, you should consider the following facts:

  • There are term life insurance policies that provide very competitive rates. If your current insurance needs can be addressed by the cheaper policy, then you can think about terminating the old policy to get the newer one.
  • When you buy a new policy, you will have to start from scratch. Meaning you will have a new contestable period, which may affect your policy or any claims made within the contestable period. Also, if you have cash value policies, you will have to start accumulating cash values.
  • Getting a new insurance coverage may mean another medical exam. Premiums may also be increased due to your increased age and to the changes in your health.

Generally, giving up an existing policy to get another is discouraged and there are sanctions for agents who urge people to do this when it would not be for the customer's best interests. So you really have to make sure that if you are replacing your existing policy, what you're getting is offering you a really, really good deal.

Why do I need to review my policy/policies from time to time?

Life insurance is a long term concern and your needs and situation may be different now and ten years later. You need a periodic review of your coverage for the following:

  • New additions and phases of your life. There may be a new child or grandchild at a later time which you may want to add to your list of beneficiaries. The addition of another child may also mean the need for an increase in your insurance coverage, as you now have more dependents. Also, you may now be nearing retirement or your children may have already finished college so that you don't need to renew your term life insurance.
  • Financial gaps in your existing insurance. You may have recently signed a new mortgage. You may be seeing an increase in your household expenses due to inflation or a change in lifestyle. These changes mean that your current insurance may not be enough. Or you may have already fully paid up your mortgage and won't need as much insurance coverage.
  • Change in income. You may now be able to afford more insurance than you used to. This means you can now consider a shift from term life insurance to permanent life insurance or to increase your coverage.

What is life assurance?

Life assurance usually refers to life insurance with an endowment. Life assurance provides the confidence that should the Insured die or survive the coverage period, he or his beneficiaries will get something. For instance, if a person buys an endowment plan with a payout at age 65, if he dies before he reaches 65, his beneficiaries will get the death benefits plus any cash values. But, if he survives and reaches the age of 65, when the policy matures, he will receive the face amount, which he can use to fund his retirement.

What if I don't like the terms and conditions of my policy?

Ask if your insurance company provides a free-look period. This period allows you time to go over the policy contract and study it. If you don't like the terms and conditions, you can opt to cancel the policy within the free-look period. The insurance company will give a full refund of your premiums as it cancels the policy.

Thus, be sure that you fully understand the terms and conditions of the policy.

My husband and I bought the same type of policy with the same level of insurance. Why are my premiums more expensive than his?

Premiums are based on many factors including health, age, lifestyle and occupation. When the insurance company took a look at you and your husband, you may have presented a stronger risk of having a claim. That is why the premiums you have are higher. Generally, if you smoke, are more advanced in age, work in a high risk occupation, have an existing medical condition or are indulging in a dangerous sport, your premiums will tend to be higher.

Can I buy life insurance for a friend?

You need to show insurance interest. In the case of you and your friend, you may need to show that you have a strong interest in seeing your friend alive than dead and that you will suffer financially upon his death. Insurance interest is a requirement in life insurance underwriting to prevent people from trying to insure other people they don't even know just so that they can make a claim later. Also, you cannot buy life insurance unless the life you want insured will give his consent by signing the application form.

Are there ways for me to save money on my life insurance premiums?

Yes, of course! Here are some ways you can save on premiums:

  • Let your fingers do the searching. Shop around. The Internet is a handy place for you to get quotes. Fill out our short form on the left and we'll compare the market for you (we compare the top life insurance companies in the UK). When comparing quotes, be sure that you are comparing products with basically the same sum insured, riders and benefits.
  • Keep healthy and live a healthy lifestyle. Your health is one of the major factors in determining premiums. If you are healthy, it will show in the medical exam. Good medical exam results will help in getting standard and even preferred rates.
  • Say goodbye to the smoking habit. Chances are, if you smoke, you will be charged with higher premiums. Kick the smoking habit and enjoy cheaper premiums.
  • Buy while you're young. Another determinant to premiums would be age. So, while you're young and premiums are low, buy life insurance and enjoy cheaper premiums for the rest of the policy's term.

Can I name a favorite charity as a beneficiary?

Yes, you can. You can even enjoy tax benefits while you're doing this. The best way to determine how to go about this is to ask a licensed agent or your accountant to understand the tax implications.

I'm already covered with life insurance at work? Do I have to buy individual life insurance?

It's best that you do. For one, most group life insurance policies only cover a small amount. Also, what happens when:

  • You leave the company
  • The company goes bankrupt and can't pay the premiums or decides to cut costs
  • You need to buy additional insurance at an older age

Also, who will be the beneficiaries of the policy – the company or your loved ones?

Having your own life insurance means more control, more security for you and your family.

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