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Tips for Buying Life Insurance

Article by Simon Christopher
Article added: 4/4/2005 - Last updated: -
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Shop Around
Don't head straight for the nearest high street bank or direct provider just because they are familiar. Many banks and high street providers are tied to one insurer and won't be able to offer potentially cheaper and better quality cover from other providers.

Use an independent insurance specialist who can compare policies and premiums. Some offer discounted premiums and free advice to help you choose the right policy and provider for your circumstances.

Know What You Need
There are many different types of life insurance and policy options that are designed for various needs. To ensure you aren't disadvantaged or paying too much for cover you don't need, either research the options or take independent advice.

Work Out How Much You Need
Generally speaking, your life insurance should provide a lump sum big enough to pay off your mortgage and other debts, or to invest to provide an income to support your dependants for a sufficient time such as six months or a year.

Guaranteed Premiums
Are the premiums Guaranteed? This means the premiums are guaranteed to remain the same throughout the term of your policy. This is opposed to `Reviewable´ premiums which, as the name suggests, are reviewed usually every 5 years and can increase at the discretion of the insurance company.

Declare All Material Facts
When applying, be sure to answer all questions fully and honestly. Declare everything that you are aware of and if in doubt, declare it anyway. Failure to declare even a minor issue can result in a claim being declined. Do not give the insurance company any excuse to refuse your claim.

Write Your Policy in Trust
Even an average life insurance pay out can easily take the value of your estate on your death over the inheritance tax allowance. Anything over this threshold is liable for 40% tax when this can easily be avoided by putting the policy in trust. Its free and simply requires completion of a trust form available from the insurance company. Once in trust, the policy remains outside your estate so won't increase its value on your death.

If Unsure Take Advice
Life insurance can be as simple as insuring your car if you know what you need and your affairs are simple. However, if you're affairs are a little more complex you should take independent advice.

PLEASE NOTE: The guidance published in this article is for information only and does not constitute financial advice or a recommendation of any particular life insurance policy or provider. If you are in any doubt please consult an independent insurance adviser. A database of advisers in your area is available at

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