Life Insurance in Brief
Life insurance pays out a specified sum in event of your death. You don’t need to meet any criteria when taking out a policy, however you do need to decide which policy to buy: level term assurance, decreasing term assurance or whole-of-life insurance.
In brief, level term assurance is taken out for a term specified by the customer, say 10 years. Often based on the number of years left on their mortgage or the length of time they expect their family to be financially dependent on them and the lump sum paid out in event of death remains the same throughout the term. Decreasing term assurance differs in that the sum paid out decreases over time and is therefore generally cheaper. This form of life insurance is often bought alongside a repayment mortgage. In contrast, whole-of-life insurance has no specified term and pays a guaranteed sum on death.
Each of these policies offer different benefits so take some time to weigh up what is important to you and your dependents. Are you taking out cover to protect your family? To pay off any debts, cover your mortgage or even your funeral costs? Whatever your answer, and this may change during your lifetime, don’t rush into making a decision without researching each policy on the market place. If you still then have questions and concerns, speak to a financial advisor for some impartial advice before purchasing. When you come to a decision on the type of policy you are going to purchase make sure it is written ‘in trust’. Essentially this means the proceeds from the life insurance policy would not be subject to inheritance as they fall outside of the policyholders estate when they die. This option is definitely worth the paperwork.
The premium you pay for your life insurance cover is based on a number of factors including the policyholders age, occupation, state of health and lifestyle. Quitting smoking or losing weight could reduce your premium in the long run so are certainly worth considering. Couples can also save on their life insurance policy by taking out joint life cover. In this case both parties must take out the same level of cover and the policy pays out if either of the policy holders die. Although taking out individual policies is more expensive than joint cover, if in the unfortunate event of both parties dying, any dependents would receive twice the pay out.
In conclusion, life insurance cover is a worthwhile investment especially when you have dependents or mortgage repayments to think about. Don’t rush into a decision and get a range of quotes from different sources before purchasing. Try contacting a broker, getting an online quote, speaking to a Financial Advisor or even picking up a leaflet at your local supermarket to find the best deal for you.
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