If you're thinking of getting life insurance, you might have come across a few common misconceptions while doing your research.
Here's why these don't need to get in the way of helping to protect your loved ones financially.
Myth 1: Insurance companies don't pay out
You might have heard people say that insurance companies avoid paying claims. In reality, this isn't the case. We publish our claims figures every year and, in 2023 we paid out on 99.3% Footnote [1] of the life insurance claims that our customers made.
You can go some way towards making sure that a future claim is paid, and that the claim process is as straightforward as possible for your loved ones.
Here's how:
- When you apply for cover, answer the questions fully, truthfully and accurately. Not telling your insurer about something important when you apply could affect a future claim
- Make sure your family knows you have a life insurance plan, who the insurer is, the policy number, and the term of the policy. This will make it easier if they need to make a claim
Myth 2: Insurance companies make it difficult to claim
Life insurance should give you peace of mind that your family's protected. While financial support is likely to be your priority, you'll also want to know that when a claim is made, it'll be managed in the right way.
Losing a loved one can be distressing, so our experienced, UK-based team help make claims as straightforward and stress-free as possible. They're available five days a week to support your loved ones through their claim.
Myth 3: Insurance companies don't care about me – I'm just a number
Many people assume that insurance companies think their customers are nothing more than a premium-paying policy number, but we want to change that. We know that, while a life insurance plan can help reduce the financial burden of losing a loved one, the emotional impact can still be difficult to manage.
That's why we work in partnership with the charity Grief Encounter, which provides free grief counselling and support for families affected by loss. We can help direct bereaved loved ones towards this support, which is free to anyone who needs it.
We also care about communities. Through our Aviva Community Fund, we celebrate and support charities across UK by providing them with funding, skills and resources.
Myth 4: Life insurance will only pay out when I die
It's true that life insurance is usually designed to pay out when someone dies, though some policies offer more than that.
Our life cover, for example, includes a terminal illness benefit at no extra cost. This pays out if you're diagnosed with a terminal illness that meets our policy definition and you're not expected to live longer than 12 months. So you and your loved ones could have the financial support you need. Once payment is made your policy will end and no further claims will be paid.
If you're looking for another type of protection, you could also consider critical illness cover. With this type of insurance, you'll receive a lump sum if you're diagnosed with one of the conditions covered, to help reduce financial worries while you focus on your health.
Myth 5: I'm covered at work, so I don't need extra cover
Some employers offer staff life cover as part of their benefits package, which is often called a death in service benefit.
This typically pays out a lump sum of around four times your salary to whoever you've chosen to receive it – known as your nominated, or named, beneficiary – if you pass away. But terms will vary, depending on the employer.
Death in service benefit can offer a worthwhile safety net if you pass away during employment but, depending on your own circumstances, you might still benefit from additional cover. Remember that employer benefits differ and, if you leave your current employer, you may lose the benefit.
Myth 6: I have no children, so I don't need life insurance
While having children is an important reason for taking out life cover, it's by no means the only one.
It's a good idea to have life insurance in place if you have a mortgage. Though it's not always compulsory, some mortgage providers will insist on it as part of the agreement.
If you have a partner and name them as a beneficiary in a will, or if your policy is in a Trust that they're named in, they could use the payout to cover bills, pay off a mortgage, and stay in the home, after you're gone. With a Trust, as well as choosing who benefits from the payout, it won't be counted as part of your estate. If you have a joint life insurance policy, when you pass away, the money will usually go to the surviving policyholder, unless you've made other arrangements.
If you don’t have someone who is directly dependent on you financially, and you have a single life insurance policy, then people who you have declared as important to you may ultimately benefit from the lump sum.
It’s perhaps less of a myth that life insurance terms can be hard to get to grips with, if they’re unfamiliar to you. That’s why we’ve created this life insurance glossary.