Life Insurance

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Life Insurance

Life Insurance (sometimes known as Life Assurance) helps provide financial security for people who depend on you, should you die.

Although money can’t replace a loved one, it can help those left behind to weather the financial storm. For example, it could pay off the mortgage or provide an income to help cover regular household expenditure.

Types of Life Insurance

There are different types of Life Insurance – the most appropriate type for you will depend on your circumstances. Life Insurance will pay out either a single lump sum (sum insured) or a regular income when you die.

  • Term Insurance – This is the simplest type of Life Insurance. You choose how long you’re covered for, eg. 20 years (the term), and the policy pays out if you die within the agreed term. You can also take out term cover as a couple, with the policy paying out on the first death only during the term. There are several different types of Term policy available, depending on your needs.
  • Family Income Benefit Insurance – This is essentially the same as Term Insurance, but instead of paying a lump sum when you die, it will pay out a regular income instead. This type of payment may be more suitable where the main purpose of the policy is to provide ongoing financial support to dependants.
  • Whole of Life Insurance – This pays out a lump sum when you die, whenever that is, as long as you are still paying the premiums.

 

This article (Life Insurance) is intended to provide a general appreciation of the topic and it is not advice.

Article expiry: 05 Apr 2021

Life Insurance - What you need to know 

When an adult in the family dies, it obviously leads to huge emotional hardship for their partner and surviving children. However, there’s no reason why that hardship needs to be compounded as a result of financial problems. That’s often the case and it’s why life insurance is something that families should always consider putting in place. Find out what you need to know below.

What is Life Insurance?

Life insurance covers the costs that your family will face if you were to pass away. It can replace your income for a period of time, cover funeral costs, outstanding debts and mortgage repayments. Each policy is unique and will have its own terms and conditions, so it’s important to pay attention to the details when choosing the policy for you.

The Different Types of Life Insurance Available

There are a few different types that you need to know about. The first is level term life insurance, and this is a type of insurance that covers you for a fixed amount of time and pays out if you die. 

Similarly, mortgage decreasing life insurance covers you for a fixed term but only covers your mortgage payments and the payout decreases as the mortgage repayment sum does.

Whole of life insurance covers you for as long as you have the policy and isn’t tied to a fixed term. It also covers more, such as the inheritance tax bill your family might face upon your death. 

Do I Need Life Insurance?

Every individual must make their own decision when it comes to deciding whether or not they need life insurance. Nevertheless, if protecting your family in the event of your passing is something you care about, it makes sense to put life insurance in place. It removes some of the worry you might otherwise experience, as well as giving you security and peace of mind.

How Much Does It Cost?

There are lots of different things that’ll impact the cost of the life insurance you buy. First of all, you need to disclose all of your medical conditions and past conditions because hiding these things could void the policy. If you have pre-existing medical conditions, the policy will be more expensive, but also potentially more beneficial. Being a smoker will also increase the cost of your life insurance policy.

What Do You Need to Think About Before Taking Out Life Insurance?

There are advisors and brokers who can help you with finding the right life insurance policy, so using those services is something to consider. When deciding whether you need a policy, think about your dependents and your finances. If you feel your family would need financial support in the event of your passing, putting a life insurance policy in place would be wise.

Many people don’t like to think about the necessity of life insurance until they’re in a position where it can no longer be avoided. Don’t let it come to that though. By putting the right policy for you and your family in place today, you’ll gain peace of mind and won’t have to worry any longer.