Call us
01242 697821

Blogs

Keep up to date with the latest news and our guides on all things mortgages. 

6 Reasons you need life insurance

If you’re looking into Life Insurance but are still on the fence whether to go ahead, check out these 6 key reasons why you might consider securing the cover for yourself and your family.

1. Buying a new home

If you die before your mortgage is repaid, then the responsibility to complete payments falls to someone you love. Life insurance enables you to be proactive about ensuring those you care for can meet those financial commitments after you’ve gone.

Decreasing cover life insurance is a type of cover that helps if you have a repayment mortgage or other sizeable reducing debt. The longer your cover is in place, the less is paid out. This is because your debts are also decreasing, and the insurance is there to help cover these payments. The monthly premiums for this type of policy may also be lower.

If you have an interest-only mortgage, you might be more interested in level-term life insurance. This is where payouts are fixed and the policy is in place for a pre-determined amount of time. The advantage of this kind of cover is that your family’s payout would be the same whether you died a year into your policy or a year before it expired.

2. Just married.

If you’ve recently become engaged or married and are joining families and assets, it can make life easier to know you are both covered if one of you were to die. Life insurance enables you to make financial contributions to your partner’s well-being after you’ve departed – which is a beautiful way to honour your marriage vows.

The type of policy that you take out could be single – i.e. only covering you – or joint. A joint policy is usually cheaper than purchasing two single policies, but in most instances, it only pays out once, if you make a claim, you are no longer covered – the surviving partner would need to take out their own individual policy after that.

Two single policies can pay out upon the deaths of each policy holder and can take away the complexity in the unfortunate circumstance that the relationship comes to an end.

There are pros and cons to both types of policy, but it's important to know that if a relationship breaks down, an insurance provider may not be able to divide a joint life policy into two single policies. Also, if you claim on a joint policy and choose to apply for a single policy later in life, it can be expensive because premiums increase with age.

3. Having a baby

The cost of raising a child is expensive, even before factoring in considerations like private education and university contributions. There are policies available that run until your child reaches maturity – and after they’re 18, it’s up to you what “maturity” means.

Providing for your child to protect them against the unexpected is a way to give yourself peace of mind and enjoy the present with them more fully. Level and increasing cover term insurance are policies which pay out lump sums if you die within your agreed term. If you wish to leave a sum of money to your kids rather than pay off debts, then consider an increasing or level term policy.

4. Planning for a funeral

According to British Seniors Funeral Report 2021*, between 2016-2021 the average cost of a funeral was around £5,631. Over 50s policies as well as level and increasing term policies can be used to contribute towards funeral payments. Over 50s life cover differs from term life in that there is no fixed length to the policy; it simply exists as long as you live and pays out upon your death. That doesn’t mean to say that you will pay indefinitely for a fixed sum of money though. You will stop paying premiums when you pass away, on your 95th birthday or on the policy anniversary date. The payout doesn’t necessarily need to contribute towards your funeral, however if that is your main motivation for taking out the policy then you might also want to consider a Funeral Benefit Option.

5. Inheritance tax

Another reason people may decide they need life insurance is inheritance tax. Inheritance tax has become a bit of a bogey man for those intending to leave money for their children once they die. Bills can run into tens of thousands of pounds, which can make a significant dent in your children’s inheritance. However, if you were to buy a life insurance policy that covered the tax bill, they could enjoy everything you intended them to receive.

You may also want to put your insurance policy into a trust. If the conditions of your trust are met, then this means that your assets no longer belong to you, but to the trust. In accordance with HMRC rules, your assets could then be exempt from inheritance tax. You would be able to decide how the trust is managed, for example whether your assets go straight to the beneficiary after your death or are retained by a trustee until your beneficiary reaches a certain age.

Trusts come with important legal implications, and should only be entered into after thorough discussion with an impartial legal or financial consultant. Once you have placed your policy in trust, it is very difficult to undo this, so being certain of what you are doing beforehand is crucial. There are several kinds of trust available, so it is also important to think long-term about how you want your money to be handled when considering this path.

6. The next generation

Getting older is a fact of life, and has a tendency to make us reflect. If you are at such a point in your life – whether due to age, ill-health or any of the above reasons – then the financial security of the next generation will be on your mind. Life insurance helps you put these worries to rest and focus on enjoying the future.

SPEAK TO AN ADVISER

* https://bit.ly/BritishSeniorsFuneralReport2021

Credit: https://www.postoffice.co.uk/life-cover/life-insurance/six-reasons-you-need-cover

Related

Supporting you through the cost of living squeeze and rising interest rates

Supporting you through the cost of living squeeze and rising interest rates

We understand that the current challenges we are all facing in light of the ongoing cost of living s...

Read More >
Use Equity Release to get your house ready for winter

Use Equity Release to get your house ready for winter

With winter approaching, are you asking whether your home needs a toasty update? If you are over 55,...

Read More >
Mortgage Life Insurance. Decreasing Term vs Level Term

Mortgage Life Insurance. Decreasing Term vs Level Term

When we think about life insurance, we typically think of the large cash pay outs should the worst h...

Read More >
5 reasons why you should consider income protection

5 reasons why you should consider income protection

Life is unpredictable and we never know what’s around the corner. With this in mind, have you thoug...

Read More >
First-Time Buyers: Frequently Asked Questions

First-Time Buyers: Frequently Asked Questions

Do you know the difference between a fixed and a variable mortgage? Have you heard of 'loan to v...

Read More >
Ofcom’s top tips to stay safe from scammers

Ofcom’s top tips to stay safe from scammers

Scams have been on the rise in recent years – recent research by Ofcom shows 41 million people rece...

Read More >

What our clients say...

Latest Blog

Key Changes to Stamp Duty

As of April 1, 2025, significant changes to the UK's Stamp Duty Land Tax (SDLT) have come into effec...
Read More

Here are some tips for managing bills and finances when you don’t have a regular income

Managing money and bills self-employed can feel like a juggling act. Especially since you don't have...
Read More

Look after your health to ensure you are ready to work

Managing money and bills self-employed can feel like a juggling act. Especially since you don't have...
Read More

Is equity release available for the self-employed?

Are you self-employed, retired, or unemployed and looking for equity release? Are you wondering if y...
Read More

Why income protection & critical illness cover are extra important for the self-employed

If you're self-employed in the UK, income protection and critical illness cover are extra critical. ...
Read More

Do you need extra building and content insurance policies in place if you work from home?

Maybe you've spent a bit of time putting together your business. Now everything is going well, you w...
Read More

Can I get a mortgage if I’m self-employed? Plus other commonly asked employment questions

Work habits in the UK continue to evolve and change. And so, the mortgage industry is addressing con...
Read More

Health Insurance and Buying a New Home: Why They Go Hand in Hand

Buying a new home is an exciting milestone but also a significant financial commitment. While health...
Read More

Selling this spring? Top tips to get your house ready for sale!

Firstly, let’s ask, how does your house look from the street? First impressions are so important wh...
Read More

What insurance do you need to buy a home?

Are you buying a home in 2025? You’ve sorted out your finances, found the perfect home to buy, and ...
Read More


Fairview Financial Ltd is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. Fairview Financial Ltd is registered in England and Wales no: 10912424. Registered office: 107 Promenade, Cheltenham, GL50 1NW.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

@ 2020 by Fairview Financial

Our Fees        

A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.

Our standard fee for mortgages is £395 and this is paid when the mortgage is offered. We charge a fee of £295 First-Time Buyers. Other fees may apply depending on the complexity of the work involved or loan amount. The maximum fee we can charge is £795.

Our standard fee for Equity Release is £895 and this is paid on completion.

We also receive a commission from the lender that will vary depending on the lender, product or other permissible factors. The nature of any commission model will be confirmed to you before you proceed. If we receive a commission, this will not affect the cost payable by you.

THINK CAREFULLY ABOUT SECURING OTHER DEBTS AGAINST YOUR HOME.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.

BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

EQUITY RELEASE: THIS IS A LIFETIME MORTGAGE. TO UNDERSTAND THE FEATURES AND RISKS, PLEASE ASK FOR A PERSONALISED ILLUSTRATION. CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE.


  • Back to top