Life insurance is one of those things that we all need but don’t want to think about. However, it is essential to consider getting a life insurance policy so that your loved ones are protected in the event of your death. So, how much does life insurance cost per month, what benefits does a life insurance policy offer and who requires life insurance?
What is life insurance?
Life insurance is a policy that you take out to ensure that your loved ones are financially protected in the event of your death. You will make regular payments to your insurer and if you die, they will pay money to your family (or whomever you have nominated to receive the payout). The money is usually either paid as a lump sum or in the form of regular payments.
How does life insurance work?
When you take out a personal life insurance policy for yourself, you will be the policyholder. You will need to nominate one or more beneficiaries who will receive the insurance pay out in the event of your death. You will pay regular premiums to the insurer, either for a fixed term or for the whole of your life. In return, your insurer provides you with cover. When you die, your beneficiary or beneficiaries will receive a set amount of money, which is dependent on the amount of cover you have.
Why take out life insurance?
Life insurance offers an array of benefits to your loved ones in the event of the worst happening. It can ensure that anyone who is financially dependent on you is protected and will not be burdened by the loss of your earnings, mortgage repayments or debts. Importantly, life insurance will also give you peace of mind and reassurance. You can be rest assured that your loved ones will be financially protected in the event of your death.
Who needs life insurance?
It might be shocking to hear that as many as 60 per cent of adults in the UK do not currently have life insurance. However, for many people, it is essential to take out a life insurance policy. You may need life insurance if:
- You are the main breadwinner in your family and your spouse is reliant on your income
- You have dependent children who would not be financially stable without your help
- You have a mortgage that is not yet fully paid off
- You have parents, siblings or other relatives who are financially dependent on you
- You want your funeral expenses to be taken care of
- You have significant unpaid debts that would reduce any inheritance for your next of kin
- Your partner is pregnant or you are planning for a baby
How can life insurance protect your family?
When you die, if you are the main breadwinner, your family will be left substantially worse off in a financial sense. A life insurance policy can provide them with stability, especially if you do not have any tangible savings to leave them. Furthermore, if you were responsible for making the mortgage payments on your home, the money from an insurance policy can take care of helping to repay the debt. A life insurance policy can also protect your children in the future. Even if you have a partner who works and earns enough money to support your family in the present, a lump sum can be put away to use for university fees and any unforeseen bills that may arise in the future. In the case that you have any other financially dependent relations, such as parents or siblings, they will also be protected if you die.
What types of life insurance are available?
There are two main varieties of life insurance in the UK:
- Term life insurance policies
- Whole-of-life insurance policies
Term life insurance policies run for a specific time period, such as ten or twenty years. These types of policies pay money to your family if you die during the fixed time period that the policy runs for. However, they will generally not pay out any lump sum at the end of the policy if you are still alive. On the other hand, whole-of-life policies will pay the money whenever you die and will pay a lump sum at any point as long as you continue to pay your policy premiums. There are also:
- Level term policies
- Decreasing term policies
Level term policies will pay out a set amount of money whenever you die during the term of the policy, whereas decreasing term policies will pay less as time goes on. The latter is generally taken out in order to cover any repayments on a mortgage.
How much does life insurance cost per month?
The monthly premium that you pay for your life insurance will vary depending on your individual circumstances, the type of premium that you choose and the level of cover you require. Many insurers will want to know details such as your age and smoker status, whether you have any medical issues and if you lead a risky lifestyle.
How can I find the best life insurance deal for me?
A life insurance policy is easy and simple to find if you are using a trusted and reliable insurer. At WIS Business Protection, we can help you find the right life insurance that is tailored to your needs.