Although arranging protection is simpler than many people expect, there are still a fair few things to bear in mind when finalising a UK life cover deal. For example, somebody might want to pay particular attention to the terms and conditions and bear in mind the fact that someone's general circumstances can change during the life of policy so things like pay out amounts may no longer be appropriate.
Whether someone is arranging a lump sum for a loved one, hoping to guarantee enough to pay for someone's education, or simply aiming to ensure that the mortgage is paid off after they are gone, life cover is a popular way of ensuring someone's close family or other beneficiaries are cared for after they die.
The different kinds of UK life cover policies allow for a range of options including a policy which pays out a simple straightforward lump sum and covers you all the way up until your death, to ones which only cover you for a period of time and only payout if you happen to die during this period. There are then also deals which pay out if you're diagnosed with a critical illness, or which have payout amounts which decrease over time in line with your mortgage.
Some things to look out for include index linked policies, which involve a payout and premium connected to the retail price index and rise alongside it every year. Those with this kind of policy may want to see if their policies are automatically linked or whether they need to opt in to linkage each year. Not doing this could mean somebody is locked out of future linking.
It's also important to bear in mind some of the limits of a policy, as, for example, some might not payout if someone's death is caused by them taking part in certain sports or other activities.
It might also be worth thinking carefully about what is actually covered by a policy. For example, a family with young children, may have one particular spouse providing most of the childcare, and if they died, this could cost a family a considerable amount to replace through care costs. Then there are other scenarios including families which have a mother or father who stays with them so they can be cared for, who would perhaps need the same level of care even if someone in the household died.
There are also all kinds of options as to who is the beneficiary, with many people choosing to name a spouse and or children as beneficiaries. Remember that you do not have to name a close relative as a beneficiary, and many people choose to name a business partner, for example. There also policies which allow a husband to take out insurance on the life of his wife, and the wife to take out insurance on the life of the husband. These are often called life of another policies and involves someone proving an insurable interest in the person whose life they are protecting - although husband and wife couples are often assumed to have an 'insurable interest'.
Whatever you go for, UK life cover is rarely as simple as sorting out home insurance, as it can be an emotive topic. However, by getting a clear idea of what it is you want, you could make the process simpler and get peace of mind at an affordable premium.