Why Life Insurance?
Life insurance is important – we can’t stress this enough! It offers peace of mind.
In the event of your death, your dependents can receive a non-taxable lump sum, allowing them to pay off debts, such as your mortgage and plan for the future.
It’s designed to give you the reassurance that if you are no longer there to provide, your dependents will be looked after. The amount of money that is paid out depends on the level of cover you are buying.
Remember, your individual life insurance follows you when you retire, and you are no longer insured by your employer. So, having an individual Life Insurance cover is vital.
How much Life Insurance do I need?
How much life insurance cover you need really depends on your circumstances such as protecting your liabilities, covering additional debts, or providing a lump sum for your loved ones to maintain their standard of living. There is no one-size-fits-all solution, and the amount of cover – as well as how long it lasts for – will vary from person to person.
How long do I need life insurance for?
The length of cover that is right for you can vary. You might only need cover to make sure the mortgage can be paid off in the event of your death. Or you might take out cover to help your loved ones while they rely on you for financial support. Another factor which should be considered is age. Generally speaking,
the younger you are when you’re taking out a policy, the lower the premiums. If you have an immediate life insurance requirement, delaying your application may mean that in the future the premiums will be more costly.
How does Life Insurance work?
A life insurance policy is a contractual arrangement between the policy holder and the life insurance company. The policyholder determines the amount of life insurance coverage required and pays a premium to the life insurance company for keeping the policy in effect. The way the premium is paid is spelled out in the policy as well. For example, the premium could be paid out to the life insurance company as an annual payment, or monthly payment. To keep the policy active, the premium must be paid according to the terms of the policy.
Can I insure my partner?
Many couples take out joint life insurance, which is usually slightly cheaper that two stand-alone policies. It should be noted that joint life insurance normally pays out only once, at the first death, and leaves the surviving partner without insurance. When the survivor wants to take out new insurance, the premiums
are likely to be higher, because the person is going to be older and/or may have an adverse health condition.
Types of Covers?
Decreasing Term Life Cover
Decreasing life cover policy is a good way of ensuring your mortgage repayments are met in case of death. Any debt that is gradually reducing may be covered by a policy of a decreasing term. It keeps track of your repayment schedule, with payout levels falling in line with your debt’s diminishing size.
Level Term Life Cover
Level Life cover provides a cash lump sum if you die in the course of your lifetime, which can be used to repay debts or simply as a way to help life carry on without your help.
Increasing Term Life Cover
Increasing Life cover has premiums that rise every year, but the payout also rises to mitigate the impact of inflation, making sure its value at the time of your death is the same as it would be now.
How much does life insurance cost?
The price you pay for a life insurance policy depends on several things.
- Your age
- Your health
- Your lifestyle
- Whether you smoke
- The length of the policy
- The amount of cover
For example, the younger you are and the less likely you’re to die from a medical condition, the cheaper your policy is likely to be.
Who can apply for Life Insurance?
You must be 18 years or older and a UK resident to apply for a policy.