Is life insurance the most suitable financial protection?

life insurance
life insurance

With a life insurance policy, a lump sum is paid to your beneficiaries should you die within the policy term. This ensures your loved ones benefit from financial stability when you’re no longer around to support them. If you have a business partner, a life insurance policy can enable them to continue the business without enduring any financial stress that may result from your death. But is life insurance the most suitable financial protection? How can life insurance cover help your loved ones and do you really need it? Here, we’ll answer those questions and guide you on the other types of financial protection available to help you make an informed decision.

How can your loved ones benefit from life insurance?

The payout from a life insurance claim can be used to repay an outstanding debt, such as your mortgage. It can also be used to help pay the household bills and other living costs. Another use is to cover your funeral expenses or to pay an inheritance tax bill that may be due. If you have children, the lump sum can contribute towards their education costs. It can also help your partner to pay for additional childcare costs.

Having this financial security in place gives you peace of mind that your loved ones are protected should you pass away. It ensures that your partner can repay the mortgage so that the family home is protected. They can also manage the household bills when your salary is no longer a factor and enjoy a more comfortable lifestyle than they’d otherwise be able to when you’re no longer around.

Do you need a life insurance policy?

You may already have life insurance via your employer in the form of a death in service policy. This means that should you die while still employed by the company, your loved ones will receive a lump sum that’s linked to your salary. You don’t pay any premiums for this benefit as they’re covered by your employer. The sum paid out, however, is considerably lower than that for a standard life insurance policy. It’s usually only two to four times your annual salary. You also need to bear in mind that the policy will end if you decide to work for someone else. It’s worth considering a separate life insurance policy for additional financial protection.

Having a life insurance policy in place may have been stipulated by your lender when you took out your mortgage. This helps to reduce their risk. It also ensures that your loved ones won’t end up with your mortgage debt in the event of your death. If you’re not sure whether this was an inclusion, check with your lender. Even if it wasn’t required by your lender, you should consider having life insurance to protect your loved ones against having to repay your outstanding mortgage loan, which is likely to be sizeable.

What other forms of financial protection are available?

Critical illness cover is a good option to have with life insurance. Just like life insurance, a lump sum is paid out after a successful claim. The difference is that this sum is paid to you after you’ve been diagnosed with a serious illness. You can have critical illness cover as a standalone policy but you may prefer to combine it with or have it in addition to a life insurance policy. That way, you have financial protection if you become seriously ill and your loved ones have financial security if you pass away during the policy term.

Another option is income protection insurance. This isn’t to be confused with family income benefit, which is a type of life insurance. Family income benefit provides your loved ones with a regular income in the event of your death rather than a lump sum. Income protection insurance, however, gives you a regular income if you’re unable to work due to an illness or injury. You receive a percentage of your salary and can make multiple claims within the policy term.

Life assurance is another option. It’s often confused with life insurance as a lump sum is paid to your loved ones when you pass away. The key difference, though, is that you specify a policy term with life insurance and a payout is only made by the insurer if you die within that term. Life assurance, however, doesn’t have an expiry date so a payout is guaranteed whenever you die.

Get expert advice on the best financial protection to suit your needs

At Trinity Finance, we understand how important it is to have financial security in place for yourself and your loved ones in case events take a turn for the worse. Our mortgage and protection brokers – located in Kent, London and Edinburgh – are highly experienced when it comes to dealing with insurance. They can discuss your circumstances and provide you with impartial advice on the various forms of financial protection available. Whether one type of cover is more suitable for you or a combination of policies, you can rely on a tailor-made solution to your financial protection needs.

Just give us a call on 01322 907 000 when you’re ready or send us an email at Our protection consultants are here to help you safeguard against future issues. This gives you peace of mind that you and your loved ones are financially secure.

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