M&S Life Insurance explained
We understand life insurance is a difficult topic, so as a result, we've created a useful guide with HSBC Life to help you understand how M&S Life Insurance works.
What is the definition of life insurance?
Life insurance is a policy that pays out a lump sum of money on the death or other eligible event such as a terminal illness diagnosis of the policyholder. The lump sum pay-out (if a claim is successfully made) can go toward funeral expenses, mortgage payments or anything else. It's important to tell your beneficiaries that your life insurance exists as they will need to know which company holds the policy in the event of your death or terminal illness diagnosis.
M&S Life Insurance is a "term life insurance" policy, providing cover over a defined term of your choice between 5-50 years depending on your demands and needs. The M&S Life Insurance application will provide you with an instant decision and, if accepted, will generate a quote for you to consider before completing the application.
I already have life insurance through my employer - do I need additional cover?
HSBC Life and M&S Bank are unable to provide advice or personalised recommendations for your circumstances for appropriate level, type or term of cover. You will need to review whether the level of cover your employer may provide is suitable for your protection needs, and consider future financial expenses (e.g. children’s education or mortgage) you may wish to cover – you can take out M&S Life Insurance to top up any existing cover you have elsewhere, or as a standalone policy if you are not covered already. If you are unsure how much cover is appropriate, you may wish to take independent financial advice from a specialised adviser or the Money Advice Service.
What types of cover does M&S Life Insurance offer?
M&S Life Insurance offers two types of cover designed for your needs. The amount you decide to be insured for, does not increase with inflation.
Level cover pays out a cash sum if you die or if you're diagnosed with a terminal illness (life expectancy is less than 12 months) during your chosen length of cover. The amount you're covered for remains the same throughout the term and is designed to help protect your family's lifestyle and everyday living expenses or help pay off a mortgage.
Decreasing cover pays out a cash sum if you die or if you're diagnosed with a terminal illness (life expectancy is less than 12 months) but the amount of cover reduces roughly in line with the way a repayment mortgage decreases. The premium remains the same however and can often be cheaper than level term insurance.
Do I need life insurance?
We understand that thinking about your death and the impact on your family's circumstances is difficult. You will not receive advice or recommendation about buying M&S Life Insurance, the amount of cover to select or the term, you will need to make your own choice as to whether it's right for you. Having a life insurance policy could give financial security to your loved ones and dependants, or anyone whose circumstances and wellbeing would be affected by your death.
How do I get a quote for life insurance?
You can get a quote for M&S Life Insurance, arranged, administered and provided by HSBC Life (UK) Limited, by applying online. You will be asked to specify how much cover you'd like and for how long, and be asked a range of questions relating to your health, lifestyle and medical background. You can add your spouse or partner to the policy for joint cover. You must choose a policy term anywhere between 5 to 50 years, which means it is not renewed annually like other insurance products such as home or car. This means it's important for you to review any existing life cover regularly to ensure it's still suitable for your needs.
How much does life insurance cost?
This is dependent on a number of factors such as your age, health and lifestyle. For these reasons, we can't give you an average or estimated life insurance cost before you've applied. You should ensure your premium is within your budget while providing enough cover for your present and future family and lifestyle needs, such as your children's education fees, your funeral costs and any other bills, mortgages or lending.
Do I need life insurance for my mortgage?
Whilst this is your decision, homeowners who want to make sure their mortgage will be settled after their death may choose to take out a life insurance policy. Decreasing term life insurance is designed to reduce in line with a capital repayment mortgage and the pay-out can be used to clear the outstanding balance. However, not all decreasing term insurance is taken out to cover mortgages.
It must be noted that decreasing term life insurance may not be appropriate for someone with an interest-only mortgage, because only the capital debt is repaid at the end of the mortgage term. On these occasions, level term life insurance may be more suitable however M&S Bank and HSBC Life cannot provide advice on what is suitable for your circumstances. If you are unsure of what to do to protect your mortgage, you should seek independent financial advice.
Can life insurance be paid into a Trust?
As with most life insurance policies, M&S Life Insurance can be paid into a trust if one is in place. HSBC Life cannot provide advice or recommendation on what is appropriate for your circumstances, however they can help you arrange putting your policy into a trust once the policy is set up, if you wish to do so. With a trust in place, the proceeds from your life policy will not be subject to Inheritance Tax - currently 40% of any part of your estate over an amount of £325,000. Trusts put you in control and allow for a quicker payment to those you care about. With a trust in place, the money will be passed directly to the beneficiaries by the trustees of the trust without the need to wait for probate (which can take many months). If you are not married, or in a registered civil partnership, a trust will prevent proceeds forming part of your estate. If you have not used a trust, or drawn up a Will, money from your policy may not automatically be paid to those you want to benefit. With a trust you can specify who you would like the proceeds of your life policy to be paid to and can provide the comfort that your beneficiaries will receive the proceeds much more quickly and have important financial support at a time when they need it. If you are in any doubt about if a trust is suitable for you, you should seek your own independent financial advice.
Is my M&S Life Insurance policy protected by the Financial Services Compensation Scheme?
HSBC Life (UK) Limited is covered by the Financial Services Compensation Scheme, so if they're unable to meet their obligations you may be entitled to compensation from the scheme. You can find further information on how your policy and pay-out are protected in the policy booklet.
Is a life insurance pay-out taxable?
Under current tax rules, pay-outs for terminal illness and death claims are usually free of personal liability to pay Income Tax and Capital Gains Tax. However, in some circumstances your pay-out may be subject to inheritance tax. You can normally help avoid this by putting your plan in trust. Writing a policy in trust allows the pay-out to go to your dependants without being part of your estate. Please note that the law relating to tax may change in the future. If you have any questions relating to tax and trusts you should consult with your financial adviser. Existing customers can find out how to put their policy in trust online.
I don't work, can I still have life insurance?
There are no restrictions for cover for unemployed or retired customers. M&S Life Insurance does however have specific occupation exclusions, which can be found in the what you should know before you start your quote section.
How do my life insurance beneficiaries receive the pay-out?
The lump sum pay-out will be paid via electronic bank transfer to the beneficiary’s bank account in the UK in all cases, except where the beneficiaries are located abroad and do not have a UK bank account in which case payment may be made by cheque. Please be advised that, when assessing a claim, HSBC Life may carry out checks on your beneficiaries, or any other connected parties, for the purpose of preventing financial crime.
Get a quotefor M&S Life Insurance
Retrieve a quotefor M&S Life Insurance
M&S Life Insurance is arranged, administered and provided by HSBC Life (UK) Limited who will conduct the sale and communicate with you after your policy start date. HSBC Life (UK) Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 88695. Registered Office: 8 Canada Square, London E14 5HQ.