arrest! Don't buy that kind of insurance policy. You May Have Been Covered...For Free - MoneyMagpie (2023)

adam edwards May 23, 2023no comment

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Can you have an insurance policy that you didn't know about?

Tracking savings, investments and insurance policies is becoming increasingly difficult due to digitization and the paperless nature of businesses.

Large financial institutions have billions of pounds of old accounts being forgotten by customers. This is especially true for banks, building societies and pension funds, which have thousands of accounts whose owners cannot be traced.

But it's not just cash that's "lost" in this way. We also, as a nation, waste billions of dollars on insurance policies we didn't know we had, and spend our wealth on new policies for things we don't have. It's already covered.

There are a number of ways you can accidentally "double up" your coverage.For example, many home insurance policies come with extra benefits, such as home travel insurance or cell phone insurance. It's easy to forget about such "extras" and unwittingly take on separate policies (which is why we at MoneyMagpie recommend keeping a spreadsheet listing all your policies, and when they expire).

Many employers also offer their employees various benefits and discounts that are often not communicated well to employees.So ask your boss what rights your contract entitles you to, even if you're not a permanent or full-time employee; self-employed workers, temporary workers, and subcontractors are sometimes entitled to the same benefits as permanent employees, especially if these "benefits ” is necessary for the job. For example, if you need to travel for work, chances are you automatically get company travel insurance or auto breakdown insurance, whether you're an employee or not.

arrest! Don't buy that kind of insurance policy. You May Have Been Covered...For Free - MoneyMagpie (1)

life insurance

But, without your knowing it, the main types of coverage you can get are life insurance and working death insurance.

According to GoCompare, as many as 2.9 million life insurance policies in the UK are at risk of not being claimed. Again, this may be due to the fact that employers often purchase these life insurance policies without the employee's knowledge.

Even more incredible, 18% of people who knew they had a life insurance policy never told relatives they would need a payment upon death, while 71% did not mention it in their will.MetroBe sure to talk to your relatives about this.

It may not just be your employer who buys life insurance for you. If you are also a member of a union, you most likely have a policy.Anyone who belongs to any of the major unions (including Unison, Unite, GMB and RMT) is entitled to a lump sum of at least £5,000 for loved ones in the event of "accidental death". Its members can also take advantage of discounts on everything from home insurance to travel insurancejoint insurance.

Others, like the Nasuwt teachers' union, go a step further for their members, offering free personal accident coverage as well as home fire and theft coverage.If you've never been unionized, but have worked for a government-run business, such as the NHS or the railways, you may be entitled to many of the same benefits as current employees.

One of our readers, a retired NHS receptionist, told MoneyMagpie that she has successfully applied"Blu-ray card"That gave her (and current nurses, soldiers and paramedics) discounts on everything from travel insurance to the vacation itself.

If you've checked to see if you have insurance and can't find anything, don't worry; you don't have to spend a penny to buy some types of coverage.For example, most credit unions offer free life insurance when you open a savings account or apply for a loan with them.

United Life Insurance

Unite yesDiscoverIf you die before your 80th birthday, the credit union will give you an extra 25p from your savings. If you die before your 65th birthday, they double your savings fund.

hePennines Community Credit UnionIt also has a similar membership program.

althoughServing and Protecting Credit Unions Free life insurance on savings and loans up to £25,000.

arrest! Don't buy that kind of insurance policy. You May Have Been Covered...For Free - MoneyMagpie (2)


You may also want to consider switching your high street bank to a paid option, which includes insurance policies such as travel insurance, phone insurance and car breakdown insurance (the savings will more than make up for the small monthly fee you pay to the bank).

virgin moneyFor example, a 'Club M account' includes worldwide family travel insurance (under 75s only), UK car repairs and coverage for mobile devices, tablets and laptops as part of a £12.50 monthly fee.If bought separately, these policies can cost up to £500 a year.

at the national level£13 per month 'Flexplus' account includes Whole Family global travel insurance, UK and European breakdown cover through AA and Whole Family mobile phone insurance.For an extra £65 a year, you can even upgrade your travel insurance to cover people over 70.

The 'Silver' account at Lloyds is also £13 per month, but if you pay £2,000 or more into your account in any given month, you get £3 back. As a 'Silver' account holder you get UK and Europe (under 65) family travel insurance, UK AA family subdivision insurance and worldwide mobile phone insurance. You can also choose other perks like a free Disney+ subscription, movie tickets or a monthly magazine subscription.

Monzo'sA 'Premium' account gets you global family travel insurance and mobile phone coverage for up to six devices, among other benefits, for £15 a month.

at the same time,cooperate Bank£15 per month 'Everyday Extra' account includes mobile phone insurance, world travel insurance under 79 and UK and European RAC sub-insurance for nominated account holders.Purchasing the various policies separately will cost you around £400 a year.

For as little as £17 a month, you can passHalifax "The Ultimate Reward"savings account. Also includes AA 'Home Breakdown Coverage', cell phone insurance for account holders, and home emergency coverage.

if you registerHSBCA 'Premier Account', on the other hand, will give you worldwide family travel insurance up to age 69 at no additional cost.However, to apply you must have an annual income of £75,000, and a mortgage, investment, life insurance or bank protection product.

Health insurance

Can't afford a bank account to get free travel insurance? Contrary to popular belief, even though the UK is no longer part of the European Union (EU), you can still get free or reduced healthcare in continental Europe. In fact, far from abolishing the European health insurance card system, we basically just renamed it.

It is now known as the UK Global Health Insurance Card., and gives you the same benefits as the previous European HealthFYI, the insurance card is still valid as long as it is valid. If not, apply for a new cardhere.

arrest! Don't buy that kind of insurance policy. You May Have Been Covered...For Free - MoneyMagpie (3)

flight delay insurance

You're also entitled to compensation for delayed or canceled flights under what is essentially a free "insurance" plan that the airline subscribes to. The amount you receive depends on how long you were delayed and which flight route you took (or didn't take, as the case may be), but you can get up to £520 per person.

For more information or to request a refund for a delayed or canceled flight,Click here.

It's not just airlines that have suffered such setbacks. All rail operators subscribe to a similar system of "insurance" for train travel delays.Click here.

in conclusion

In fact, there are many such 'insurance' policies that we as UK consumers are unaware of. Most of us are probably vaguely aware that savings up to £85,000 are safe under the Financial Services Compensation Scheme (FSCS). Again, it's basically a form of insurance that a lot of people don't know they have until they race Northern Rock.

What may be less well known is that this coverage extends not just to building societies and credit unions, but also to funeral planning, investments and pensions.On top of that, if the company you own the policy with also goes bankrupt,Food Safety Control SystemAlso covers this.


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How to make money with permanent life insurance? ›

One way to make money with life insurance is to sell it as an investment. Another way is to use it as a retirement vehicle. Finally, life insurance can also pay for final expenses and estate taxes.

Why is cash value life insurance bad? ›

Cash value life insurance is more expensive than term life insurance. Unlike term life insurance, cash value insurance policies don't expire after a specific number of years. You may borrow against a cash value life insurance policy. You may also withdraw cash from the policy, but this will reduce the death benefit.

Are whole life policies worth it? ›

Whole life insurance is generally a bad investment unless you need permanent life insurance coverage. If you want lifelong coverage, whole life insurance might be a worthwhile investment if you've already maxed out your retirement accounts and have a diversified portfolio.

Which permanent life insurance policy offers the highest initial cash value? ›

Variable Universal Life

This type offers the greatest upside potential, but also the most downside potential, as cash value is based on the performance of the investment subaccounts.

Can I cash out my life insurance policy? ›

Yes. You can cash out a life insurance policy. How much money you get for it, will depend on the amount of cash value held in it. If you have, say $10,000 of accumulated cash value, you would be entitled to withdraw up to all of that amount (less any surrender fees).

Can you get money from your life insurance policy? ›

Withdrawing Money From a Life Insurance Policy

Generally, you can withdraw money from the policy on a tax-free basis, but only up to the amount you've already paid in premiums. Anything beyond the amount you've already paid in premiums typically is taxable. Withdrawing some of the money will keep your policy intact.

How much does a $1 million dollar whole life insurance policy cost? ›

The cost of a $1 million life insurance policy for a 10-year term is $32.05 per month on average. If you prefer a 20-year plan, you'll pay an average monthly premium of $46.65. In addition to term length, factors such as your age, health condition or tobacco usage may affect your rates.

What is the cash value of a $10000 life insurance policy? ›

The $10,000 refers to the face value of the policy, otherwise known as the death benefit, and does not represent the cash value of life insurance policy. A $10,000 term life insurance policy has no cash value.

What are the cons of cash value life insurance? ›

  • Cash value life insurance is more expensive than term life insurance.
  • The cash value takes years to build.
  • Beneficiaries don't receive the cash value.
  • The policy can lapse if too much cash value is removed.
  • Cash value loans charge interest.
  • Surrendering the policy can greatly reduce the net cash surrender value.

At what age is whole life insurance good? ›

Generally, the younger and healthier you are when buying life insurance, the more money you'll save. As we age, we're at increased risk of developing health conditions, which can result in higher mortality rates and higher life insurance rates. You'll typically pay less for life insurance at age 25 than at age 40.

What are 2 disadvantages of whole life insurance? ›

Pros and cons of whole life insurance at a glance
Permanent protection that lasts your entire lifeSignificantly more expensive than term life
Premiums never increaseBest to take out when younger for more affordable premiums
The death benefit will not decreaseYour protection needs may change as your life changes
5 more rows

What are unnecessary types of insurance? ›

15 Insurance Policies You Don't Need
  • Private Mortgage Insurance. ...
  • Extended Warranties. ...
  • Automobile Collision Insurance. ...
  • Rental Car Insurance. ...
  • Car Rental Damage Insurance. ...
  • Flight Insurance. ...
  • Water Line Coverage. ...
  • Life Insurance for Children.

What life insurance never goes up? ›

Whole life insurance policy benefits

Your premiums are fixed and will never go up, regardless of market conditions. You may be able to withdraw funds or take out a loan. Your death benefit is guaranteed as long as you make the required premium payments.

What life insurance doesn't expire? ›

Permanent life insurance is a type of life insurance policy that doesn't expire as long as you continue to pay the premiums.

What life insurance does not increase with age? ›

Whole life insurance provides guaranteed death benefit protection for as long as you live while earning cash value. A whole life insurance policy doesn't expire as long as regular premiums are paid. The cash value grows, tax-deferred, at a guaranteed rate, and the premiums never increase.

What disqualifies life insurance payout? ›

If you intentionally lie on your life insurance application, are murdered by your beneficiary, or die doing something that is excluded by your policy, your life insurance beneficiary will not receive any money.

Can you cash out term life insurance before death? ›

If you have a term life insurance policy, you cannot cash it out before death because it does not build up cash value. However, if you have a whole life insurance policy, you may be able to cash it out before death.

How much can I borrow from my life insurance policy? ›

Loan limits: The limit for borrowing money from life insurance is set by the insurer, and it's typically no more than 90% of the policy's cash value. If you need more than that amount, you may need to consider other loan types.

What happens if you don't pay back a life insurance loan? ›

An insurance loan uses your cash value as collateral. If you don't pay it back, the policy will eventually lapse. When this happens, your beneficiaries lose their inheritance from the life insurance, and you lose the opportunity to use the money again in the future.

Which life insurance has cash value? ›

The cash value feature is included on permanent life insurance types like whole life and universal life. Since final expense life insurance is a type of whole life, it can also have cash value and can be a more affordable option for obtaining a policy with cash value.

What happens to leftover life insurance money? ›

When you die, any remaining cash value in your life insurance policy goes back to the life insurance company. If you haven't utilized the funds put into the cash value, you've wasted years of premiums.

How much is a $5 million dollar life insurance policy? ›

5 Million Life Insurance Policy Cost

Term life insurance policy is the most popular. This type of life insurance makes it much more affordable to get high levels of death benefits. The average 5 million term life insurance cost could be $190 per month or $2,280 per year.

Do you pay taxes on life insurance? ›

Life insurance payouts generally aren't subject to income taxes or estate taxes.

How much does $500,000 of life insurance cost? ›

The cost of a $500,000 term life insurance policy depends on several factors, such as your age, health profile and policy details. On average, a 40-year-old with excellent health buying a $500,000 life insurance policy will pay $18.44 a month for a 10-year term and $24.82 a month for a 20-year term.

What happens to cash value at death? ›

Cash value is not paid to beneficiaries

When you pass away, cash value typically reverts to the life insurance company. Your beneficiaries receive the policy's death benefit amount, minus any loans and withdrawals of cash value you made.

How long does it take for whole life insurance to build cash value? ›

How fast does cash value build in life insurance? Most permanent life insurance policies begin to accrue cash value in 2 to 5 years. However, it can take decades to see significant cash value accumulation.

How do I cash out my life insurance while alive? ›

There are three ways that you can cash out your life insurance policy while you're still alive:
  1. Tap into the cash value through loans, withdrawals, or surrender.
  2. Apply for living benefits.
  3. Life settlements.

What is better 401k or life insurance? ›

In comparison to life insurance, 401(k) has a stronger savings potential. The investment earnings may compound over time. Additionally, some companies match employee contributions, helping you save more for retirement. One component of permanent life insurance is the cash value.

How do I avoid taxes on cash value of life insurance? ›

One way to access all your cash value and avoid taxes is to withdraw the amount that's your policy basis—this is not taxable. Then access the rest of the cash value with a loan—also not taxable. If you die with a loan against the policy, the death benefit is reduced by the outstanding loan amount.

What is the cash value of a bank account? ›

The cash value, also referred to as the cash balance value, is the total amount of actual money—the most liquid of funds—in the account. This figure is the amount that is available for immediate withdrawal or the total amount available to purchase securities in a cash account.

Is life insurance worth it after 70? ›

The bottom line. Determining whether life insurance is worth it as a senior really depends on your specific budget and goals. But if you don't have enough saved to cover end-of-life expenses, are eligible for a good rate and want to leave something for your loved ones, it may be worth acting now.

What happens when you outlive your term life insurance? ›

Your coverage ends if you outlive your term life policy. Before it expires, you can choose to convert your policy to permanent insurance, buy a new policy, or go without coverage.

Can a 75 year old get life insurance? ›

Yes, seniors over 75 can get life insurance with no medical exam. There is also life insurance over 80 no medical exam. When you buy life insurance over 80, it's expected that you might have health issues. Depending on your health status, you might qualify for a simplified issue burial insurance policy.

What does whole life insurance not cover? ›

The five things not covered by life insurance are preexisting conditions, accidents that occur while under the influence of drugs or alcohol, suicide, criminal activity, and death due to a high-risk activity, such as skydiving, and war or acts of terrorism.

Why do people buy whole life insurance? ›

Whole life insurance is good for people who want lifelong coverage, premiums that don't change and a cash value component. Your beneficiary will get a life insurance payout no matter when you die, as long as you've paid the premiums needed to keep the policy in force.

Who would benefit from whole life insurance? ›

Whole life insurance offers coverage for life, so it's best for people who need to cover permanent financial needs. If you want to pay for your funeral and any debts you have — no matter your age at death — a whole life insurance policy may be the right fit.

What are 3 kinds of insurance you should have? ›

Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have.

What are things that Cannot be insured? ›

An uninsurable risk is a risk that insurance companies cannot insure (or are reluctant to insure) no matter how much you pay. Common uninsurable risks include: reputational risk, regulatory risk, trade secret risk, political risk, and pandemic risk.

What is the most important type of insurance? ›

Health insurance is arguably the most important type of insurance.

What is the hottest thing in life insurance? ›

Indexed universal life is one of the insurance industry's hottest products. It accounted for a quarter of all individual life sales as measured by premium for the first nine months of 2019, according to research firm Limra, up from 20% in 2014.

What is the most expensive life insurance ever? ›

The Guinness record holder: The most valuable life insurance policy ever sold, according to Guinness World Records, is valued at a total of $201 million, on the life of a well-known U.S. billionaire who resides in the Silicon Valley area of California and is actively known in the technology space.

What is the most expensive life insurance? ›

Whole Life Insurance

Whole life is the more expensive option. Both your monthly premium and the death benefit are guaranteed, meaning they won't change over the life of the policy.

What is the 5 year rule for life insurance? ›

you have been insured for the 5 years of service immediately before the date your annuity starts, or for the full period(s) of service during which you were eligible to be insured if less than 5 years; and. you have not converted to an individual policy.

Does life insurance pay out after 80? ›

Some insurers offer term life insurance at 75, 80 or, in rare cases, 85, however the older you get, the greater your risk of illness, and this type of cover could become expensive. Another option for life cover for over 70s is whole of life cover which is offered by most providers.

How much does life insurance cost for a 75 year old? ›

Average Annual Insurance Rates for Men*
AgeTerm: $50,000 - $250,000 BenefitWhole: $50,000 - $250,000 Benefit
70$600– $2.330$2,820 – $16,320
75$1,140 – $4,060$3,750 – $22,440

Which is better whole life or term life insurance? ›

If you only need life insurance for a relatively short period of time (such as only when you have minor children to raise), term life may be better, as the premiums are more affordable. If you need permanent coverage that lasts your entire life, whole life is likely preferred.

Does permanent life insurance build cash value? ›

Cash value builds up in your permanent life insurance policy because your premiums are split into three categories. One portion of your premium goes toward the death benefit, another goes toward the insurer's costs and profits, and the third contributes to the policy's cash value.

What is the average return on permanent life insurance? ›

What is The Average Return on a Whole Life Policy? Although whole life insurance offers a steady and reliable return of 1-3.5% annually on your cash value, you could earn more by investing in alternative options like stocks, bonds, or real estate assets.

How long does it take for permanent life insurance to build cash value? ›

Most permanent life insurance policies begin to accrue cash value in 2 to 5 years. However, it can take decades to see significant cash value accumulation. Consult a licensed insurance agent to understand the policy's cash value projections before applying.

How much interest does permanent life insurance pay? ›

Unlike whole life, this is an “interest driven” policy, which normally pays a minimum guaranteed interest of 4% to 4.5%. If the interest rates are continuously low, additional premiums may have to be paid to avoid a lapse of coverage.

What are the 4 types of permanent life insurance? ›

The four most common types of permanent, cash value life insurance are whole life, standard universal life insurance (UL), variable UL, and indexed UL.

What life insurance does not expire? ›

Permanent life insurance provides lifelong coverage as long as you pay your premiums. No matter when you die, your beneficiary will receive the death benefit payout. The primary kinds of permanent life insurance are: Whole life insurance: This type of policy lasts for the lifetime of the insured party.

What happens after 20 years of paying life insurance? ›

What does a 20-year term life insurance policy mean? This is life insurance with a policy term of 20 years. If the policyholder dies during that time, the life insurance company pays a death benefit to his or her beneficiaries, often dependents or family. After 20 years, there is no more coverage, and no benefit paid.

Is it better to have whole or term life insurance? ›

If you only need life insurance for a relatively short period of time (such as only when you have minor children to raise), term life may be better, as the premiums are more affordable. If you need permanent coverage that lasts your entire life, whole life is likely preferred.

What is the cash value of a 250000 life insurance policy? ›

In a universal life policy, it may reduce the death benefit on a dollar-for-dollar basis. For example, if you have a $250,000 policy and withdraw $25,000, your beneficiaries will only receive a $225,000 death benefit from your policy.

What is the best age to buy permanent life insurance? ›

Generally, the younger and healthier you are when buying life insurance, the more money you'll save. As we age, we're at increased risk of developing health conditions, which can result in higher mortality rates and higher life insurance rates. You'll typically pay less for life insurance at age 25 than at age 40.

How much a month is a $500 000 whole life insurance policy? ›

Frequently asked questions. How much does whole life insurance cost? A 35-year-old with minimal health conditions can pay about $571 per month for a whole life insurance policy with a $500,000 death benefit coverage amount. Whole life is significantly more expensive than term life insurance on average.


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