Questions to ask yourself before you buy life insurance – London Business News | London Wallet

Events such as getting married, buying a home or starting a family are often triggers for considering life insurance. It’s often during these big milestones that we start to think about financially protecting our loved ones in the future.  Life insurance can be an excellent financial investment and give you real peace of mind, but it’s important to consider all your options carefully before taking out any cover. Thankfully, the experts at Smart Insurance have put together these helpful tips on what to think about before starting your life insurance…

1. Is it really necessary for me to get life insurance?

To answer this you need to decide if you have any dependents and then consider how they’d cope financially if you died. Your dependents are your partner, children or parents who may be getting older.

To work out if they could cope financially if you were no longer around, consider what your family’s current financial situation is. Do you have debts or a mortgage? Could they comfortably afford to maintain their standard of living if the worst were to happen? If not, then life insurance might be a sensible option.

Having said that, if you have considerable savings or investments that could make up the financial shortfall if you weren’t here, then maybe you don’t need life insurance.

2. Do I need it right now?

Generally speaking, the younger you are when you start your life insurance, the cheaper it is. So it’s often a good idea to start it sooner rather than later. However, factors such as your health and lifestyle can also affect the price of your policy.

If you decide to wait until you’re older to buy life insurance, there could be a chance you develop health conditions in the meantime which make it harder to secure a policy, or that can make it more expensive.

Often the trigger for people starting their life insurance policy is a big milestone such as getting married, taking out a mortgage, or having children. These are all good reasons to start thinking about protecting your loved ones’ futures.

3. How much cover do I really need?

This is one of the most important decisions you’ll make when starting your life insurance policy. You may have heard the common saying that ‘you should apply for 10 to 15 times your annual income’. However, we recommend a more considered approach by taking into account all your financial obligations and assets.

To work out how big a payout you’d ideally like to leave your loved ones, you can start by considering your current financial obligations – mortgage, debt, bills, day-to-day expenses, and education costs. These are all the costs your loved ones will still need to cover should you no longer be here.

Then consider any assets you currently have, such as savings or investments which your dependents will be able to rely on. You can offset these against the total financial obligations you calculated.

Smart Insurance have an online life insurance calculator which can help you to decide on the cover amount that’s best for you.

4. Do I need a policy if I already have life insurance through work?

You may find your employer has provided some life insurance cover for you already, as part of your job. This is known as death-in-service cover. It’s important to check if you have this in place when you start your own life insurance policy, so you can factor it into your calculations. You may even decide the cover from your employer is enough for your family to survive on. However, if you move jobs and your cover stops as a result, you’ll want to look at starting your own life insurance policy.

5. How long will I need cover for?

This depends on how long your financial responsibilities might last. For example, if you’re paying off a mortgage, how long will it be until it’s paid off in full? If you have children, how long will it be until they’re financially independent or no longer in education? You may decide you only need cover for a certain number of years. In this case you’ll probably choose a ‘term’ life insurance policy, which lasts for a set length of time. Alternatively, if you want to guarantee your loved ones a cash payout, regardless of how long you live, you might consider a ‘whole-of life’ insurance policy instead.

6. What is my budget for life insurance?

You simply decide on a monthly payment amount that you can afford. Obviously, the bigger the payout you want then the higher your premiums will be. So be sure to strike a balance between the two.

7. Should I compare multiple providers?

Different providers offer different prices, policy details and benefits. It’s important you choose a provider who is right for you. Also, consider choosing one who is highly rated.

Smart Insurance has earned a 5-star rating on Defaqto, and has gained a Platinum Trusted Service award from Feefo. Alongside this we offer FREE Health & wellbeing Services,¹ 10% cashback on your first year’s premiums,² and a £125 gift card.*

Final thoughts

Buying life insurance is a deeply personal decision. It needs clear thinking, careful planning, and an honest look at your financial responsibilities. By asking the right questions upfront, you can make a well-informed choice that supports your loved ones when they need it most. At Smart Insurance we’ll help you navigate the options open to you and help you make the right decisions for you.

Life insurance isn’t just about the future. It’s about providing certainty in the present. And when chosen wisely, it can be one of the most impactful financial decisions you ever make.

* For new Family Life Insurance policy holders only, once a minimum of 6 successful monthly premiums have been paid and the total premiums paid exceed the face value of the gift card. View full terms and conditions. Restrictions apply, see www.amazon.co.uk/gc-legal.

1. Please note that the Smart Insurance Health and Wellbeing services do not form part of your life cover contract and it could be changed or removed in the future. This is a non-contractual benefit from Smart Insurance and can be withdrawn at any time. These services are only available to customers who purchased their policy on or after 27th September 2023.
2. As a Smart Family Life Insurance policy holder, once you’ve made your first 12 full monthly premium payments, you’ll get back 10% of your first year’s premiums which will automatically be paid within 14 working days. It’s simply our way of saying thank you for choosing Smart Insurance.