5 things you do not know about Life Insurance in the UK

17 May 2019

Life insurance in the UK is one of the most well-known types of personal insurance chosen to protect your relatives or financial obligations. This is often the first type of insurance that comes to your mind when you think about the financial security of your family and your loved ones. It may seem that you already know everything about it, but there are still many myths and ambiguities about Life Insurance. It’s worth taking a closer look at them.

  1. Accidental death or dying because of an illness?

At Prestige Financial Advisers (an insurance broker who advises Polish people living in the UK), more and more often we come across people who want to compare or change their current policies. Occasionally we get asked if we can look for Life Insurance for our clients, which will pay for both accidental death and dying as a result of an illness, and not just for the accidental passing.

Well, one should realize that a proper Life Insurance will pay for both accidental death (the so-called external cause) and dying as a result of an illness (the so-called internal cause). People whose policy pays only for accidental death usually have Accidental Death Benefit and they confuse it with Life Insurance. Most often, this type of insurance was purchased with the following providers: Alico, AIG, MetLife – so if you have this type of policy, it is worth reviewing the terms and conditions of the general conditions so that your family does not get a big surprise should you die of heart attack or cancer and they do not get any compensation. It is necessary to take it into account, because the difference is huge. Death is caused by accidents only in about 3.5% of all deaths, and as much as 96.5% are caused by illnesses. (1)

  1. Terminal Illness Benefit.

Not everyone knows that Life Insurance pays not only for death, but also in case of a diagnosis of Terminal Illness.

It is an indispensable part of every Life Insurance policy in the UK offered by the majority of insurers and is not paid for separately (it is already included in the policy). Terminal Illness is a medical diagnosis that definitively states that the death of a person will occur within the next 12 months and there is no treatment option available. This is not about a specific disease – a specialist doctor simply has to state that in his opinion the patient is expected to die within a year (e.g. a highly advanced disease that cannot be stopped or there is no medication that could help). This is the only case where you can receive a pay-out while you are still alive.

  1. Do insurers pay adequate claims in the event of death?

This is a very important topic, because we can pay our premiums for 20, 30, 40 years and more, so it is worth knowing the official statistics of claims payments from Life Insurance policies in the UK.

Here, contrary to what we frequently hear, the matters look very well for the insured persons. The average number of claims paid for Life Insurance from the entire insurance market for 2017 was as high as 98%! (2)

Only in 2017, a total of 35,602 claims for life insurance in the UK were made for a total amount of £ 2,788,625,000. The 2% of people who did not receive a pay-out were, for example, people who did not respond correctly to questions on the medical application, so it is important to choose a professional adviser, who can explain all the details and prepare the application accordingly.

  1. Who gets the money in the event of death?

The issue of paying claims from Life Insurance is more complex than it might seem at first glance. No one will automatically and quickly get the money if Life Insurance does not include a trust.

The Trust is a legal document, which allows to determine beneficiaries (people who are to get the pay-out) and what percentage of the lump sum they get. In addition, adult trustees should be indicated, whose duty will be to properly ensure the distribution of money to designated beneficiaries – very important if we have underage children.

Moreover, the Trust is particularly important for partners who live in an informal relationship, because they might completely miss out on the pay-out. In the case of Life Insurance, this problem is solved by the trust. Additionally, having the trust speeds up the procedure of paying out the claim, as well as ensures that the money is not included in the calculation of the Inheritance Tax, which may potentially be up to 40%. (Https://www.gov.uk/inheritance-tax)

  1. Additions to Life Insurance.

You can often extend the range of your Life Insurance with affordable extras or bundle it with other insurance, thus getting a discount – such as Critical Illness Cover or Income Protection.



These five points are just a small number of nuances that you can come across when choosing the right Life Insurance in the UK. The subject is really much more complicated. Preparing your application and trusts correctly, choosing the right options or insurer, are not things that are easy to do and you can make a lot of mistakes that may cause a problem with claims and unpleasant experiences for the family in the future. It is worth discussing this with an experienced and qualified adviser who will give you professional advice, help you avoid unnecessary complications and save a lot of time.


🚨 Data accurate as of the date of publication – 17.05.2019.

🚨 The above material is for informational purposes only and does not constitute a sales offer or financial advice. Before taking out any insurance, credit agreement or other financial product, you should obtain individual advice on your requirements and the general terms of the contract.

4.8/5 - (40 votes)

Do you need professional advice or a no obligation quote?

Ask us for a quote


Podatek od zysków kapitałowych Navigating Capital Gains Tax – need to knows
21 June 2024
Capital Gains Tax (CGT), the levy on profits from the sale of assets such as...
First Time Buyers First-time buyers overlooked?
20 June 2024
The Spring Budget came as a disappointment for anyone looking to get a foot on...
Equity realise Equity release trends
19 June 2024
Statistics from the Equity Release Council highlight the trends seen in the market last year...
Insurance quote