Life Insurance UK Common Myths Debunked

Life insurance. For many, the term conjures images of complex paperwork, high costs, and a benefit so far in the future it feels almost abstract. It’s a financial product shrouded in mystery and, frankly, a fair bit of misinformation. These misconceptions can be costly, preventing people from securing the financial safety net their loved ones might one day desperately need.

But what if we told you that much of what you think you know about life insurance is wrong? What if getting cover was simpler, more affordable, and more crucial than you ever imagined?

WeCovr clears up the biggest misconceptions about life insurance

As expert protection advisers, we speak to people across the UK every day. We hear their concerns, their questions, and the myths that hold them back. In this definitive guide, we’re going to tackle the most common myths head-on, armed with facts, figures, and decades of industry insight. Let’s separate fact from fiction and empower you to make an informed decision about your family's future.

Myth 1: "Life insurance is far too expensive for me."

This is, without a doubt, the number one reason people give for not having life insurance. The perception is that it’s a luxury reserved for the wealthy. The reality? It’s often surprisingly affordable.

A 2024 study by a leading insurer found that people consistently overestimate the cost of life insurance, often by more than 300%. The truth is, a healthy non-smoker in their 30s can often secure a substantial amount of cover for the price of a few weekly coffees or a monthly streaming subscription.

What Actually Determines the Cost?

Your monthly premium isn't plucked out of thin air. It's carefully calculated based on a few key factors:

• Your Age: The younger you are when you take out a policy, the cheaper your premiums will be.
• Your Health and Lifestyle: Insurers will ask about your medical history, whether you smoke or vape, and your alcohol consumption. A healthier lifestyle translates to lower risk and lower premiums.
• The Cover Amount: The larger the lump sum payout (£100,000 vs. £500,000), the higher the premium.
• The Policy Term: How long you want the cover to last (e.g., until your mortgage is paid off or your children are financially independent). A 20-year term will be cheaper than a 35-year term.
• The Type of Policy: A simple level term policy is generally cheaper than a policy that also includes critical illness cover.

Example Premiums for a Healthy Non-Smoker

To illustrate, here are some example monthly premiums for a £200,000 level term assurance policy over 25 years. These are indicative figures and the actual cost will depend on your individual circumstances.

As you can see, locking in a policy when you are young and healthy offers incredible value. The premium you secure at the start is typically fixed for the entire policy term, meaning it won't increase as you get older or if your health changes.

Myth 2: "I'm single with no children, so I don't need it."

It's true that the most common trigger for buying life insurance is having children or taking out a mortgage. But to think it’s only for parents is a narrow view that overlooks several important financial responsibilities.

Ask yourself these questions:

• Do you have a mortgage? Even if you're single, your death doesn't make your mortgage disappear. Without life insurance, the lender would seek to repossess the property, potentially forcing a sale and leaving any co-owner or family members to deal with the fallout.
• Do you have other debts? Personal loans, car finance, and credit card balances can be passed on to your estate. A life insurance payout can clear these, so your family isn't burdened.
• Who would pay for your funeral? The average cost of a basic funeral in the UK now exceeds £4,000, according to the 2024 SunLife Cost of Dying report. Many people are shocked to learn this, and a life insurance policy can easily cover this expense, preventing your family from facing financial hardship at an already difficult time.
• Do you support anyone else? Perhaps you help support an ageing parent or a sibling. A policy could provide them with a financial cushion.
• Do you want to leave a legacy? You could leave a lump sum to a favourite charity, a godchild, or a nephew or niece to help with university fees or a house deposit.

Furthermore, if you're single now, it's worth considering Income Protection. This is a different type of policy that pays you a regular, tax-free income if you're unable to work due to illness or injury. For a single person with no other financial support, losing your income can be catastrophic.

Myth 3: "My employer provides 'death in service' cover, so I'm sorted."

Death in service benefit is a fantastic workplace perk, and it’s certainly better than having no cover at all. However, relying on it exclusively can be a risky strategy. Many people overestimate how much protection it provides and overlook its significant limitations.

Death in Service vs. Personal Life Insurance

Let's break this down. A typical death in service benefit of 4x salary might sound generous. But if you earn £40,000 a year, that's a £160,000 payout. If you have a £250,000 mortgage and two young children, that sum will be exhausted very quickly. It might clear a portion of the mortgage, but it won't replace your lost income for the 15+ years until your children are independent.

The biggest issue is portability. The average person changes jobs every five years. Your death in service cover does not come with you. If you leave your job and develop a health condition before starting a new one, you might find getting personal life insurance is suddenly much more expensive or even impossible.

A personal life insurance policy, secured independently, acts as the foundation of your financial protection. Your work benefit should be seen as a welcome, but temporary, top-up.

Myth 4: "It's a scam. Insurers will do anything to avoid paying out."

This is perhaps the most damaging myth of all, and it is demonstrably false. The UK insurance industry is highly regulated by the Financial Conduct Authority (FCA), and insurers have a duty to treat customers fairly.

The statistics speak for themselves. According to the Association of British Insurers (ABI), in 2023, 97.3% of all life insurance claims were paid out. That's an astonishingly high figure, representing billions of pounds paid to families when they needed it most.

Why are some claims denied?

The small percentage of claims that are not paid almost always come down to one thing: non-disclosure.

This means the policyholder was not truthful on their application form. For example, they:

• Failed to mention they were a regular smoker.
• Didn't declare a pre-existing medical condition, like a heart problem or a previous cancer diagnosis.
• Were not honest about their alcohol consumption or recreational drug use.

Insurers base their decision to offer cover and the price of that cover on the information you provide. If that information is found to be inaccurate or incomplete when a claim is made, the insurer has the right to void the policy. This is not about 'scamming' people; it's about the fundamental principle that the contract was based on false pretences.

The key takeaway is simple: be completely honest in your application. Even something that seems minor could be important. Working with a broker like WeCovr can help guide you through the questions to ensure you disclose everything correctly, giving you peace of mind that your policy is 100% valid.

Myth 5: "I'm young and healthy. I'll get it when I'm older."

This logic seems sound on the surface, but it’s financially flawed. Waiting to buy life insurance is one of the most common and costly mistakes you can make.

The absolute best time to buy life insurance is when you are young and healthy. Why?

1. Lowest Possible Premiums: As we saw in the table earlier, age is a primary driver of cost. A 25-year-old could lock in a policy for under £10 a month. A 45-year-old seeking the same cover could be paying three or four times that amount.
2. Locking in Your Rate: Most term life insurance policies come with guaranteed premiums. This means the price you pay on day one is the price you'll pay for the entire 20, 30, or 40-year term. You are protected from future price rises, even if you develop health problems later in life.
3. Future-Proofing Your Insurability: Health is unpredictable. A clean bill of health today is no guarantee for tomorrow. You could develop high blood pressure, diabetes, or another chronic condition in your 40s. At that point, not only will cover be more expensive, but some conditions could make you uninsurable altogether. Securing a policy while you are fit and well guarantees you have protection in place.

Think of it like this: you don't wait for your house to be on fire before you buy home insurance. You buy it to protect against the unexpected. Life insurance works on the exact same principle.

Myth 6: "I'm a stay-at-home parent, so I don't have an income to protect."

This myth stems from a fundamental misunderstanding of economic value. A stay-at-home parent might not earn a salary, but the work they do is immensely valuable and would be incredibly expensive to replace.

Legal & General's 'Value of a Parent' research consistently shows that the economic contribution of a stay-at-home parent is equivalent to a full-time salary, often estimated at over £30,000 per year.

The Cost of Replacing a Stay-at-Home Parent's Role

If the stay-at-home parent were to pass away, the surviving partner would suddenly have to pay for services that were previously provided for free.

Note: These are illustrative figures for 2025 and can vary significantly by region.

A life insurance payout would give the surviving partner the financial flexibility to:

• Hire a nanny or pay for full-time childcare.
• Reduce their own working hours to spend more time with the children.
• Pay for services like cleaning and laundry.
• Manage the household without immediate financial pressure.

The emotional toll of losing a partner is immeasurable. A life insurance policy ensures that a financial crisis isn't added to that burden. Both parents, regardless of their employment status, are crucial to the family's stability and should be insured.

Myth 7: "I have savings, so I don't need life insurance."

Having a healthy savings pot is an excellent financial habit. It's crucial for emergencies, short-term goals, and retirement. However, it is not a substitute for life insurance, especially when you have significant long-term liabilities like a mortgage or dependent children.

The difference comes down to leverage and time.

Let's imagine a 35-year-old couple, the Jacksons, with a £300,000 mortgage and one child. They want to ensure the mortgage is paid off if one of them dies.

• Option A: Life Insurance. They take out a joint decreasing term policy for £300,000 over 25 years. The premium is around £20 per month. If one of them were to pass away in year two, having paid just £480 in premiums, the policy would pay out close to the full £300,000, clearing the mortgage instantly.

• Option B: Savings. To save £300,000, they would need to put aside £1,000 every single month for 25 years (assuming no interest). If one of them passed away in year two, they would have saved £24,000 – leaving a mortgage debt of £276,000.

Life insurance provides a large sum of money exactly when it is needed, for a very small regular cost. Savings, on the other hand, take decades to build to a meaningful level. While essential, a savings account cannot replicate the immediate, substantial protection that life insurance offers.

Myth 8: "The application is too long, complicated, and intrusive."

The thought of endless forms and a full medical examination is enough to put anyone off. While the application process for life insurance was once quite cumbersome, technology has made it significantly easier and faster.

For the majority of applicants (especially those under 50 and in good health), the process looks like this:

1. Get a Quote: This takes about 60 seconds online. You provide basic details like your age, smoker status, and the cover you want.
2. Complete the Application Form: This is usually done online or over the phone with an adviser. It involves a set of health and lifestyle questions. It typically takes 20-30 minutes.
3. Instant Decision (Often): In many cases, the insurer's automated underwriting system can analyse your answers and provide an immediate decision. Your policy can be active within the hour.

What about medicals?

Full medical examinations with a nurse or doctor are becoming much less common. Insurers usually only request them if:

• You are asking for a very large amount of cover (e.g., over £1 million).
• You are older (e.g., over 60).
• You have disclosed a significant or complex pre-existing medical condition.

More often, if an insurer needs more information, they will simply write to your GP for a report (with your permission, of course). The key is that the process is far more streamlined than most people believe. Working with WeCovr makes it even simpler, as our advisers can guide you through the application, ensuring you answer everything correctly and helping you find the insurer with the smoothest process for your circumstances.

Myth 9: "I won't get cover if I have a pre-existing medical condition."

This is a common fear, particularly for people living with chronic conditions like diabetes, high blood pressure, or mental health issues. While having a pre-existing condition does make the application more complex, it absolutely does not mean you'll be automatically declined.

Insurers are in the business of assessing risk, not avoiding it entirely. When you declare a medical condition, the underwriter will want to understand its severity and how well it is managed.

Here's how it generally works:

• Well-Managed, Common Conditions: For things like high blood pressure or high cholesterol that are well-controlled with medication, you can often get cover at standard rates or with a small premium loading (an increase on the standard price).
• More Serious Conditions: For conditions like Type 1 diabetes, a history of heart attack, or recovery from some cancers, the insurer will need more detail. They will likely request a GP report. The outcome could be:
  • Cover offered with a loading: Your premium might be 50%, 100%, or even 200% higher than the standard rate to reflect the increased risk.
  • Cover offered with an exclusion: The insurer might offer you a life insurance policy but exclude claims related to your specific condition.
  • Postponement: If you've been recently diagnosed or your condition is unstable, the insurer may postpone their decision for 6-12 months to see how your health stabilises.
  • Decline: In cases of very severe, terminal, or unmanaged conditions, cover may be declined.

This is where the expertise of a specialist broker is invaluable. At WeCovr, we have deep knowledge of which insurers are more sympathetic to certain conditions. Some insurers specialise in covering people with diabetes, while others might have more favourable terms for those with a history of mental health issues. We can take your specific circumstances and approach the most suitable providers on your behalf, significantly increasing your chances of getting the right cover at the best possible price.

Furthermore, we are committed to our customers' long-term wellbeing. That's why every WeCovr policyholder receives complimentary access to CalorieHero, our exclusive AI-powered health and calorie tracking app. We believe in supporting you not just with financial protection, but also in your journey towards a healthier life, which can positively impact your insurance options in the future.

Myth 10: "My risky job or hobby means I can't be insured."

If you're a scaffolder, an electrician, a nurse, or you enjoy hobbies like rock climbing or scuba diving, you might assume you're uninsurable. This isn't true. Insurers are used to assessing a wide range of occupational and recreational risks.

For most roles, including many skilled trades, there is no impact on your life insurance application at all. For roles that involve specific risks (like working at heights, with high-voltage electricity, or offshore), the insurer may:

• Ask more detailed questions about your specific duties and safety procedures.
• Apply a small premium loading.
• In very rare cases, for extremely hazardous jobs, they may apply an exclusion for death while at work.

It's the same for hobbies. If you're a casual skier, it won't be an issue. If you're a semi-professional mountaineer tackling Everest, they will want to know more. Honesty is key.

For tradespeople, nurses, and others in physically demanding or riskier jobs, another product is arguably even more important than life insurance: Personal Sick Pay or Income Protection. These policies are designed to replace your income if you're unable to work due to any illness or injury, whether it happens at work or not. Given the higher risk of injury in some professions, securing your monthly income is a top priority.

Myth 11: "I'm self-employed or a company director, so personal policies aren't for me."

This couldn't be further from the truth. If you are self-employed, a freelancer, or a company director, you are arguably more in need of protection because you don't have the safety net of an employer's benefits package.

For the Self-Employed and Freelancers:

• Life Insurance: Is essential to protect your family, cover your mortgage, and clear business debts if you were to pass away.
• Income Protection: This is your sick pay. If you can't work, you don't earn. An income protection policy is a non-negotiable part of your financial toolkit, providing a monthly income to cover your bills until you can return to work.

For Company Directors: You have access to some of the most tax-efficient protection policies available. Instead of paying for cover from your personal, post-tax income, your limited company can pay the premiums.

• Relevant Life Insurance: This is a director-specific death in service policy. The company pays the premium, and it's typically treated as an allowable business expense. The benefit is paid tax-free to your family via a trust. It’s a highly efficient way to get personal cover.
• Executive Income Protection: Similar to the above, the company pays the premium for your personal income protection policy. This is also an allowable business expense, making it far more cost-effective than a personal plan.
• Key Person Insurance: This is different. It's a policy that protects the business itself. If a key individual (like a founder or top salesperson) dies or becomes critically ill, the policy pays a lump sum to the business to cover lost profits, recruit a replacement, or clear business loans.

If you run your own business, speaking to an adviser about these specialist products is one of the smartest financial decisions you can make.

Other Important Protection Products to Consider

While life insurance is the cornerstone, a comprehensive financial safety net often includes other types of cover:

• Critical Illness Cover: This pays out a tax-free lump sum if you are diagnosed with a specific serious illness, such as cancer, heart attack, or stroke. It's often combined with a life insurance policy and is designed to provide financial support during treatment and recovery.
• Family Income Benefit: Instead of a single lump sum, this policy pays out a regular, tax-free monthly or annual income upon your death, for the remainder of the policy term. It’s an excellent and often more affordable way to replace a lost salary to cover ongoing family expenses.
• Gift Inter Vivos Insurance: A specialist policy for estate planning. If you gift a large sum of money or an asset (like a property) to someone, it may be subject to Inheritance Tax if you die within seven years. This policy pays out a lump sum to cover that potential tax bill, ensuring your beneficiaries receive the full value of the gift.

Conclusion: Knowledge is Your Best Policy

Life insurance is not a complicated, expensive luxury. It is a fundamental, affordable, and accessible tool for financial planning. It's about taking control and ensuring that no matter what happens, the people you care about most are not left facing a financial crisis.

The myths we've debunked are persistent, but they are based on outdated information and fear, not fact. The reality is that the UK insurance industry pays out tens of millions of pounds every single day to families who have suffered a loss.

By understanding the truth about how life insurance works, how much it costs, and who it’s for (spoiler: it’s for almost everyone), you can take the simple steps needed to protect your world. Don't let myths and misconceptions leave your family's future to chance.