Press Release 10-08-2010

Life Insurance: top 5 tips for consumers

Here are the top 5 tips that consumers should bear in mind when buying Life Insurance, according to Protection specialists LifeSearch.

1. SHOP AROUND
2. GET THE RIGHT TYPE OF POLICY
3. BUY ENOUGH COVER
4. CONSIDER SINGLE LIFE INSTEAD OF JOINT LIFE POLICIES
5. USE A TRUST

The Life Insurance market can be very complicated to even the most experienced customer. To help guide them LifeSearch have put together 5 top tips on how to pick through all the options and choose the best policy to ensure your family is financially protected if the worst happens during the current economic turmoil.

1. SHOP AROUND

Too many people trust their bank or another tied source to provide the best price or advice. High Street mortgage lenders and supermarkets are usually tied to just one provider and can be very expensive. Make sure you speak to a company that is not tied to just one insurer and can advise you on the best policy for your own unique circumstances. Remember that no one insurance company can ever be competitive or suitable for everyone.

2. GET THE RIGHT TYPE OF POLICY

This might sound obvious; however, there are dozens of different types of life cover plans available. Known as 'Term Assurance' the most common form of life cover pays out should you pass away during a specific time period. However the amount of payout you receive can be level, increasing or even decreasing over time to protect a mortgage. Cover can also be paid as an income (known as Family Income Benefit) or a lump sum, and a range of other options are available including critical illness, waiver of premium, conversion, renewal and so forth. There are also policies that run until you pass away, regardless of when this may be, so either do your research or speak to someone who can guide you through these options.

3. BUY ENOUGH COVER

£100,000 might sound like a lot today, but the effects of inflation will reduce the real value of the payout over the term of a policy, which is a pitfall that few people actually consider until it is too late. Consider the option of indexation so that the value of the policy keeps track with inflation. We don’t believe that any set formula works for every individual when deciding how much cover to take out; however, insuring any debts, such as the mortgage with an extra £150,000 per young child would be a good start.

4. CONSIDER SINGLE LIFE INSTEAD OF JOINT LIFE POLICIES

Traditionally joint life cover was far cheaper than a couple taking one policy each. However, in recent years this has changed yet couples still automatically believe that buying a joint poicy is the right thing to do. Buying two single policies potentially provides double the cover, doesn't leave a surviving partner without cover later in life and often only costs a few percent more. Couples should compare the price between the two options before buying.

5. USE A TRUST

Every £100,000 of life insurance is a potential £40,000 tax bill under current Inheritance Tax legislation. A trust is a simple way to ensure that the monies go to the right person quickly and, as any asset under trust is not considered part of your estate, upon death the pay out is not taxable. Sadly not everyone realises the importance of a trust. Delays in estate planning can often occur as it can take months, if not years, for probate to be granted. Assets in trust bypass such delays meaning that the monies are paid promptly so make sure your financial adviser arranges one for you.

Guide to Life Insurance premiums

Quotes are for £150,000 of cover over a 25 year term for a non-smoker in good health.

Source: www.lifesearch.co.uk

Matt Morris, LifeSearch Senior Policy Adviser, says "Almost everyone needs some form of protection, especially if they have debts and dependants. State benefits are a very basic safety net and only really cover people for the bare minimum. It is crucial to ensure you look into protecting the family finances as soon as possible and Life Insurance is one of the most basic areas to consider, especially as premiums have fallen dramatically in the past 6 years."

Enquiries

• Matt Morris, Senior Policy Adviser
  Direct Line:   0207 065 1020 / Mob. 07595 106287
  e-mail: mattmorris@lifesearch.co.uk

Notes to editors

• About LifeSearch
• LifeSearch can source case studies where required and can provide tables of typical premiums.
• Consumers can now buy Protection Insurance products online with regulated advice in a quick and simple format for the first time ever without having to deal with an adviser at www.getliferight.co.uk.
• Contact LifeSearch