Stop! Don't buy that insurance policy. You might be covered already...for free - MoneyMagpie (2023)

Adam Edwards 23rd May 2023No Comments

Reading Time: 6 minutes

Could you have insurance policies you don’t know about?

Keeping track of savings, investments and insurance policies is getting increasingly difficult thanks to digitalisation and companies going “paperless”.

The big financial institutions are holding billions of pounds in old accounts that customers have forgotten about. This is especially true of banks, building societies and pension funds, which have thousands upon thousands ofaccounts whose owners they cannot trace.

But it’s not just cash that is being “lost” in this way.As a nation, we’re also wasting billions on insurance policies we don’t know we have, and spending our hard-pressed dosh on new policies for things we’re already covered for.

There are a whole range of ways in which you could accidentally “double up” on insurance.Many home insurance policies, for example, come with added perks, like family travel insurance or mobile phone cover. It’s quite easy to forget about such “extras” and inadvertently take out separate policies (this is why we at MoneyMagpie suggest keeping a spreadsheet listing all your policies – and when they expire).

Many employers also offer their staff an array of perks and discounts, which are often poorly communicated to the staff.So,do ask your boss what your contract entitles you to, even if you are not a full-time or permanent employee; freelancers, temps and sub-contractors can sometimes be entitled to the same perks as permanent employees, especially if those “perks” are necessary for the job. For example, if you are expected to travel for work, there’s a fair chance you may be automatically covered by the company’s travel insurance or car breakdown cover irrespective of whether you’re a permanent member of staff or not.

Stop! Don't buy that insurance policy. You might be covered already...for free - MoneyMagpie (1)

Life insurance

The main types of cover you could be insured for without your knowledge, however, arelife insurance and death-in-service cover.

According to GoCompare, there are a whopping 2.9 million life insurance policies that are at danger of going unclaimed in the UK. Again, this is likelydue to the fact that these life insurance is often taken out by employers without the knowledge of the staff.

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Even more incredibly, of the people that are aware they have a life insurance policy, 18 per cent have never told a relative that they will be due a payout when they die, and 71 per cent haven’t mentioned it in their will.Make sure you speak to your relatives about this.

It’s not just your employerwho may have taken out a life insurance policy for you. There’s a strong chance you couldhave a policy if you’re a member of a trade union, too.Anybody who has signed up with any of the main trade unions, including Unison, Unite, the GMB andthe RMT, is entitled to at least a £5,000 lump sum for their loved ones in the case of an “accidental death”. Its members are also able to benefit from discounts on everything from home insurance to travel cover via Union Insurance.

Others, like the teachers’ union Nasuwt, go even further for its members, offering free personal accident insurance and home fire-and-theft cover too.If you’ve never been a member of a union, but used to work for a government-run agency of business, like 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 had successfully applied fora ‘Blue Light Card’ which gives her (and currentnurses, soldiers and carers) discounts on everything from travel insurance to the holiday itself.

If you’ve checked if you have cover, to no avail, don’t fret; you don’t have to spend anything to sign up for some types of insurance.Most credit unions, for example, offer free life insurance when you open a savings account or take out a loan with them.

Union life insurance

Unify and Discoverycredit unions will give your next of kin an extra 25pcon top of your savingsif you die before turning 80. If you die before your 65th birthday, they will double what’s in your savings pot.

The Pennine Community Credit Unionalso has a similar scheme in place for members.

While Serve and Protect Credit Union offers free life insurance of up to £25,000 on savings and loans.

Stop! Don't buy that insurance policy. You might be covered already...for free - MoneyMagpie (2)

Insurance from banks

You might alsowant to consider switching high street banks to a paid-for option that comes with insurance policies like travel insurance, phone insurance and car-breakdown included (the savings will more than offset the small monthly fee you pay to the bank).

Virgin Money’s ‘Club M Account’, for example, comes with worldwide family travel insurance (for under 75s only), UK car breakdown, and mobile, tablet and laptop cover as part of its£12.50 monthly fee. The policieswould cost up to £500 a year, if bought separately.

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Nationwide’s£13-a-month ‘Flexplus’account includes worldwide travel insurance for the whole family, UK and European breakdown cover through the AA, and mobile phone insurance for the entire family. For an extra£65 a year, you can even upgrade the travel insurance to cover peopleover 70.

Lloyds Bank’s ‘Silver’ account also costs £13 a month, but you can get £3 of that back if you pay £2,000 or more into your account on any given month. As a ‘Silver’ account holder, you receive UK and European family travel insurance (up to 65 years), AA breakdown family cover in the UK, and worldwide mobile phone insurance. You’ll also get to choose one other perk, like a free Disney+ subscription, cinema tickets or a monthly magazine subscription.

Monzo’s ‘Premium’ account gives you worldwide family travel insurance and mobile phone cover on up to six devices, among other perks, for its £15 monthly fee.

Meanwhile, the Co-operative Bank’s £15-a-month ‘Everyday Extra’ account includes mobile phone insurance, worldwide travel insurance up to the age of 79, and UK and European breakdown cover with the RAC for named account holders.To buy the various insurance policies individually would cost you in the region of £400 a year.

For £17 a month, you can get worldwide travel insurance for you, your partner and any kids under 18through the Halifax ‘Ultimate Reward’ current account. It also includes AA’s ‘Breakdown Family Cover’, mobile phone insurance for the account holder, and home emergency cover, too.

If you sign up for HSBC’s‘Premier Account’,on the other hand,you’ll get worldwide family travel insurance up tothe age of69–at no extra cost. To apply, however, you havetohave £75,000 a year in income as well as a mortgage, investment, life insurance or protection product from the bank.

Health insurance

Can’t afford to pay for a bank account to get free travel insurance? Contrary to popularbelief, you can still get free or reduced healthcare in mainland Europe despite Britain no longer being in the European Union (EU). In fact, far from scrapping the European Health Insurance Card system, we basically just renamed it.

It’s now known as the UK Global Health Insurance Card, and gives you all the same benefits as your old European HealthInsurance Card, which, FYI, is still valid, as long as it’s in date. If it’s not, applyfor a new card here.

Stop! Don't buy that insurance policy. You might be covered already...for free - MoneyMagpie (3)

Delayed flight insurance

You’re also entitled to compensation for delayed or cancelled flights under what is essentially a free “insurance” scheme that the airlines are signed up to. The amount you receive depends on how long your delay was and the route of the flight you took (or didn’t take, as the case may be), but you could be sent up to £520 per person.

For more information, or to apply for a rebate on a delayed or cancelled flight, click here.

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It’s not just airlines with such fallbacks. There’s a similar “insurance” system for delays to train journeys that all the railway operators are signed up to. Click here.


In fact, there are lots of such “insurance” policies we don’t realise we have as UK consumers. One that most of us are probably vaguely aware of, is that savings are secure to the tune of £85,000 under the Financial Services Compensation Scheme (FSCS). Again, this is basically a form of insurance, and one that many people didn’t know they had until the run on Northern Rock.

What even fewer people probably know is this cover also extends not only to building societies and credit unions, but also to funeral plans, investments and pensions, too.Best of all, if the company that you have your actual insurance policies with goes belly up too, the FSCS also covers that.


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At what age should you stop term life insurance? ›

You may no longer need life insurance once you've hit your 60s or 70s. If you're living on a fixed income, cutting the expense could give your budget some breathing room. Make sure to discuss your needs with an insurance agent or a financial advisor before making any major moves.

Can you get money back from life insurance policy? ›

If you have a permanent life insurance policy, then yes, you can take cash out before your death. There are three main ways to do this. First, you can take out a loan against your policy (repaying it is optional).

Can someone take out a life insurance policy on me without my knowledge? ›

Frequently asked questions. Can someone take a life insurance policy out on me without my knowledge? No, someone can only take a life insurance policy out on you with your consent and participation in the application process. They also need to prove they rely on you financially.

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.

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.

Is life insurance worth it after 65? ›

If you retire and don't have issues paying bills or making ends meet, you may not need life insurance. If you retire with debt or have children or a spouse that is dependent on you, keeping life insurance is a good idea. Life insurance can also be maintained during retirement to help pay estate taxes.

What happens to money at end of term life insurance? ›

The policy expires, and that is the end of your coverage. You have paid for the coverage for the length of time specified in the policy, and that is all you will receive. With Return Of Premium Term Life Insurance, you will get your money back at the end of the policy if you live past the term.

What happens if you take the cash value out of a life insurance policy? ›

When you take cash value from life insurance, you reduce the death benefit your beneficiaries will receive. The cash value is the portion of your premiums the insurance company has set aside to grow over time. You can access this money through policy loans or surrendering the policy to the insurance company.

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.

Can I get life insurance on my mother without her knowing? ›

No. The insured person has to provide consent and a signature, so there is no way you can take out a policy on anyone without them knowing.

How much is life insurance a month? ›

The average cost of a life insurance policy ranges from $40 to $55 per month. The true cost varies by the type of insurance, coverage amount, and personal factors. Permanent insurance tends to be more expensive than term life insurance and is used differently. Check out our guide to the best life insurance companies.

Can the owner of a life insurance policy cash it in? ›

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).

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.

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.

Do rich people use cash value life insurance? ›

High-earners and wealthy people can use life insurance to pay estate taxes on a large inheritance. Cash value life insurance offers an alternative tax-deferred investment account if you've maxed out traditional accounts. Life insurance trusts can be used alongside permanent life insurance to maximize your assets.

How much does a $100000 life insurance policy cost per month? ›

The average monthly cost of life insurance for a 10-year $100,000 policy is $11.02 or $12.59 for a 20-year policy.

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.

What is the best type of life insurance for seniors? ›

A guaranteed issue life insurance policy is often the best option for seniors in poor health. This is a type of life insurance that does not require a medical exam or answer any health questions, and you can't be turned down in any case.

How much is AARP life insurance? ›

AARP life insurance rates

We pulled 2021 sample rates using AARP's online quote tool for healthy men and women 50 years and up. AARP only offers coverage for people at least 50 years old. Costs average $156 per month for $100,000 in coverage, depending on factors like your age and health.

What age buys the most life insurance? ›

What age group buys the most life insurance? Young adults aged 18 to 34 are the most likely to buy life insurance, followed by 35- to 44-year-olds. This may be because young adults are starting families and want to ensure their loved ones are cared for financially if they die prematurely.

Does life insurance go away when you retire? ›

Individual life insurance policies you have won't be affected by your retirement. However, most employer-provided group life insurance policies end when you retire.

What happens if I outlive my whole life insurance policy? ›

Permanent life insurance doesn't expire the same way a term policy does, but it does eventually “mature” if you live long enough. At that point, the full cash value of your policy would pay out, ending your coverage.

Does life insurance go to debt? ›

Insurance regulations prevent creditors from taking the life insurance death benefit from your beneficiaries even if you have outstanding debts. Only the people listed in your policy can receive a payout, so life insurance companies won't pay out to an unlisted creditor.

What happens when you outlive your term life insurance? ›

Generally, when term life insurance expires, the policy simply expires, and no action needs to be taken by the policyholder. A notice is sent by the insurance carrier that the policy is no longer in effect, the policyholder stops paying the premiums, and there is no longer any potential death benefit.

Do you pay taxes on life insurance cash out? ›

Generally, life insurance death benefit payouts received as a lump sum are not taxable. The cash value growth within a permanent life insurance policy is typically not taxable either.

Can I sell my life insurance policy for cash? ›

If your policy has built up a cash value, you can withdraw money or take a loan on the policy. If it has a cash surrender value, you can stop the policy and get the money built up in the cash value. However, there may be charges for surrendering early.

Do you get both death benefit and cash value? ›

Also known as permanent life insurance, cash-value life insurance policies provide both a death benefit and a cash-value accumulation during the policyholder's lifetime.

How much cash is a $100 000 life insurance policy worth? ›

The cash value of your settlement will depend on all the other factors mentioned above. A typical life settlement is worth around 20% of your policy value, but can range from 10-25%. So for a 100,000 dollar policy, you would be looking at anywhere from 10,000 to 25,000 dollars.

Who gets the cash value in a life insurance policy? ›

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.

Do I get the cash value of life insurance to keep? ›

A life insurance policy's cash value is separate from the death benefit, so your beneficiaries will not receive the cash value when you pass away. Any cash value that's left in your life insurance policy when you die is kept by the insurer.

Who gets life insurance if no beneficiary? ›

Without a named beneficiary, your life insurance proceeds become part of your estate. The life insurance proceeds get distributed accordingly, along with the rest of your assets. Your estate may need to go through probate, which often charges substantial fees and could take a long time before reaching your heirs.

When a parent dies who gets the life insurance? ›

When the policy owner dies, the life insurance company will pay the death benefit to the named beneficiary. The death benefit will be paid to the deceased's estate if no named beneficiary exists. The death benefit is typically paid out within 30 days of receiving proof of death.

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.

How much life insurance do I need at age 55? ›

What is the rule of thumb on how much life insurance coverage you need? Consider getting up to 30X your income between the ages of 18 and 40; 20X income at age 41-50; 15X income at age 51-60; and 10X income for age 61-65.

How much is life insurance for a 55 year old? ›

Monthly cost of term life insurance by age
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Feb 14, 2023

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.

Is your spouse automatically your beneficiary on life insurance? ›

A primary beneficiary is the person (or persons) first in line to receive the death benefit from your life insurance policy — typically your spouse, children or other family members.

Can a life insurance beneficiary be changed after death? ›

A beneficiary cannot be changed after the death of an insured. When the insured dies, the interest in the life insurance proceeds immediately transfers to the primary beneficiary named on the policy and only that designated person has the right to collect the proceeds.

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.

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.

Who has the most expensive life insurance policy? ›

A mystery tech billionaire has just purchased the most valuable life insurance policy ever. It's worth $201 million. The policy was sold by Santa Barbara, Calif. -based SG, a global advisory firm specializing in complex financial solutions for wealthy clients.

Can I sell my $100000 life insurance policy? ›

You can sell your life insurance policy for cash. You must be the owner and insured on the policy, the policy must have a face value of $100,000, and, in most cases, you must be at least 65-years-old to sell a policy. Seniors and terminally ill people will have the most success selling a life insurance policy.

Can you cash out life insurance before death? ›

Can you cash out a life insurance policy before death? If you have a permanent life insurance policy, then yes, you can take cash out before your death.

How long does it take for 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.

Can I sell my $50000 life insurance policy? ›

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home, or any other valuable asset that will create immediate cash.

Do millionaires use cash? ›

Studies indicate that millionaires may have, on average, as much as 25% of their money in cash. This is to offset any market downturns and to have cash available as insurance for their portfolios. Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires.

Why do rich people use whole life? ›

For many rich people, it makes sense to purchase whole life insurance, because this kind of policy can provide a death benefit to loved ones that is generally tax free. And this money can be used to pay estate or inheritance taxes, so that other estate assets do not have to be liquidated to cover this cost.

How do rich people borrow from life insurance? ›

They can utilize leverage to borrow money from their policies for just about anything they need. They may pay, say 5% interest, to the insurance company with an Alternate Loan on their LASER Fund, while their money is still earning as much as 10% historically.

What happens after 20 year term 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.

Does Suze Orman recommend term life insurance? ›

That's why Orman says it's best to set up a term life insurance policy that will remain in effect until your children reach early adulthood. In fact, in a recent podcast episode, Orman suggested getting life insurance that will last until your kids reach age 23 or 24.

Is life insurance worth it after 50? ›

If you buy life insurance in your 50s, it does cost significantly more — there's no way around it. If you no longer have financial dependents and have enough savings to cover debts or final expenses, a term life insurance policy might be an unnecessary expense.

Can you have too much term life insurance? ›

Yes, you can be overinsured with too much life insurance. This occurs when your policy amount outweighs your financial obligations minus your assets. You can have multiple life insurance policies, but your age, net worth, and income determine how much coverage you're eligible for with the insurer.

Do you get any money after term life insurance ends? ›

Your family won't receive a death benefit after your term life insurance policy expires, so you'll need a replacement policy to continue coverage. You can convert your policy into permanent insurance or buy a new term policy to replace coverage. You may not need new coverage if you don't have financial dependents.

Do you get money at the end of term life insurance? ›

Term life is typically less expensive than a permanent whole life policy – but unlike permanent life insurance, term policies have no cash value, no payout after the term expires, and no value other than a death benefit.

What insurance does Suze Orman recommend? ›

Consumers buying life insurance have a choice between term and whole life policies. Suze Orman recommends term life policies. Term life can be a cheaper and better option for many people.

What is the downside to term life insurance? ›

While term is often the cheapest form of life insurance, there are some negatives to buying coverage. The policy doesn't build cash value, has no surrender amount if you cancel, and, if you have to renew, your premium is adjusted based on your current age and health, which can mean much higher rates.

What is the most popular term for life insurance? ›

These days, almost everyone buys level term insurance. The terms “level” and “decreasing” refer to the death benefit amount during the term of the policy. A level term policy pays the same benefit amount if death occurs at any point during the term.

What is the best type of life insurance? ›

If budgeting is your biggest concern, term life insurance may be the best choice. If you have many dependents, whole life insurance may be a better route. However, if financial planning and cash value are most important to you, universal life insurance may be a strong option.

At what age does life insurance become too expensive? ›

“Every birthday puts you one year closer to your life expectancy and thus, you are more expensive to insure,” says Huntley. He estimates that rates increase every year by 5% to 8% in your 40s, and by 9% to 12% each year if you're over age 50.

Why is it bad to have too much insurance? ›

Overspending on insurance might jeopardize savings for a down payment on a home, retirement, and college money for children. It can also eat away the funds you need for an emergency fund.

How much life insurance should a person have? ›

Most insurance companies say a reasonable amount for life insurance is at least 10 times the amount of annual salary. If you multiply an annual salary of $50,000 by 10, for instance, you'd opt for $500,000 in coverage. Some recommend adding an additional $100,000 in coverage per child above the 10x amount.

Do I need life insurance if I have a 401k? ›

A 401(k) will help provide for your family while you're alive, and life insurance will help provide for your family after death. Both options will help provide you with the financial peace of mind that your family will be taken care of after you're gone.


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