Life Insurance Explained: How It Works

Far too many people miss out on an opportunity to support their families should the worst happen, all because they don't know about life insurance.


Life insurance is affordable, available and it's never too late to secure a policy. Once your cover is in place, you have the peace of mind that your family is taken care of financially when you die.


What is Smart Insurance Life Cover?


When you have Life Insurance cover, your family is guaranteed a lump sum benefit when you die.


This lump sum can help pay for immediate costs, such as funeral expenses, or it can free your loved ones from the burden of meeting joint financial responsibilities alone, like taking care of shared mortgages or loans. All you have to do is pay a monthly premium while you’re alive. 


Not sure what Life Insurance can do for you? Don't worry, it's a perfectly normal reaction! We have a guide so you can find out more about why you might need Life Insurance.


Why should I consider Life Insurance?


While the death of a loved one can be a devastating experience, there's no reason why something positive can't come from it; When we have taken the precaution of putting Life Insurance in place, at least we can be sure that our families will receive the financial support they need.


It won’t bring us back, but it will settle any outstanding bills, loans or expenses. It doesn’t matter if you feel fit and healthy now, the truth is, we’re all going to get old and any of us could suffer a serious illness or accident.


How does Smart Life Insurance work? 


We provide a range of insurance products to suit all financial circumstances. If you just want a fixed lump sum to cover funeral expenses and any other outstanding debts, our Guaranteed Life cover offers a maximum benefit between £2,000 and £20,000 at an affordable premium starting as low as £3.57 a month. 


If you’re looking to take care of your family, we offer Family Life Insurance with a maximum benefit ranging from £60,000 to £750,000. With this policy, you can also add on optional extras to boost your cover. 


Whatever policy you choose, you can set up cover over the phone and simply make your monthly payment. When it’s time to make a claim, your beneficiary just has to contact our UK-based customer service and we’ll arrange payment as quickly as possible (usually within days). 


Am I eligible? 


Our Guaranteed Life Insurance is available to any UK resident aged between 30 and 80. Our Family Life Insurance is available to any UK resident aged 18 to 64.


In both cases, there’s no medical or blood tests involved. We can set up your cover over the phone quicker than you can say ‘accepted’. 


How much are monthly premiums?


Your monthly premium will depend on your age at the start of your policy, and the amount of benefit you have selected.


Our Guaranteed Cover, for example, starts at just £3.57 a month. The earlier you can start your policy, the greater your range of options when it comes to premiums and benefit. 


How are Life Insurance premiums calculated? 


Our Guaranteed Life policy offers a fixed benefit ranging from £2,000 to £20,000, depending on age. If you’re under 54, you can insure for the full amount, whereas if you’re starting your policy after 75, your maximum benefit is £6,000 – which could still be enough  to cover funeral costs. 


With our Family Life insurance, you can raise your benefit amount significantly. If you’re aged 18 to 44, for example, you can get up to £750,000 cover.


Even if you’re starting between 60 and 64, you can  still get £150,000, and all our policies have a minimum benefit of £60,000. These figures are for the benefit paid out in the event of death by natural causes. With our Guaranteed Life cover, we also pay out three times your benefit amount in the event of Accidental Death. 


With our Family Life policies, you can also add on optional cover for Accidental Death, Children and Critical Illness, which are paid in addition to your Life Insurance. 


If this seems a little bit confusing and you want to understand it a bit better, you can check out our guide to how your Life Insurance policy is calculated.


Age-based and Level policies 


With our Guaranteed Life Insurance, as long as you pay your premiums, you will have cover for the rest of your life and the premiums remain level.  However, with our Family Life Insurance you can choose from two premium options. They are either an age-based or a level policy.


With a Level policy, you pay a fixed amount each month for the duration of your term (10 to 40 years). That’s great if you want the certainty of fixed monthly premiums. 


With our age-based policy, your benefit amount increases by 5% each year in the first 10 years (and your premium rises correspondingly). That means your benefit amount will help keep pace  with inflation, and the policy lasts for as long as you keep up the premiums. 


This policy typically offers a lower initial monthly premium, and the peace of mind that your benefit will be worth as much in real terms when you need it as it was when you took out the policy. 


Your choice of optional covers


With our Smart Insurance Family Life policy, you have the freedom to add on extra cover depending on your circumstances. These benefits are paid in addition to your Life Insurance benefit. 


Optional Children’s cover


If you have a financially dependent child  under the age of 21, you can insure against Accidental Death or serious injury/illness.


We’ll pay a maximum of £30,000 benefit if your child is seriously injured or suffers an illness leading to blindness, deafness, paralysis or other defined conditions. 


Critical Illness cover


Insure against the risk of serious illness, which could limit your ability to maintain your income in the short or long term. We’ll pay up to 50% of your Life Insurance benefit if you suffer a defined illness such as cancer, heart attack, stroke, along with some other conditions. 


Accidental Death cover


Without the time to prepare or put your affairs in order, your family could be in serious financial difficulty should you die suddenly as the result of an accident.


Our Optional Accidental Death cover gives your family a maximum £650,000 benefit (paid on top of your Life Insurance benefit) if you were to die as the result of an accident. 


What exclusions apply? 


With Smart Family Insurance we  cannot cover any death that is the result of self-inflicted injuries, or Accidental Death as the result of alcohol or drug use, criminal acts, or defined dangerous activities.


Also our Critical Illness cover extends to malignant tumours only, and does not cover pre-malignant tumours, prostate cancers, skin cancers, and thyroid tumours (although there are some exceptions). 


Can I put my policy into trust? 


It’s your right to limit the amount of tax and duty your family would have to pay on your Life Insurance benefit, so we can help you put your policy in a trust to maximise its value. 


Please note that this applies only to Smart Family & Guaranteed Life Insurance.