Life insurance is one of those things few of us like to think about – and that’s not only because it involves thinking about the inevitable. It’s also because some find it complicated. But if you want to help provide financial security for your dependants when you pass away, it’s worth looking into.
Why have life insurance?
Life cover can be used to help pay off the mortgage and support the family in case either the key earner or homemaker passes away.
Joint policies can be taken out to protect you and your partner to help the ones you leave behind cope financially should the worst happen.
Depending on the type of policy you have, it can pay out a lump sum or provide a regular income. The key is to identify what you want life insurance cover for, because that will help determine the best life insurance policy for you – term insurance or whole of life, for example.
It's important to check what is included and what is not in your life insurance quote. It may be worth consulting an independent protection adviser to help understand the different policies available and get the right cover for you. Here are some thins to consider:
- Think about the exclusions. Your policy may not pay out if you take part in dangerous sports, die from drug or alcohol abuse or have an existing medical condition.
- Confirm the age limits on your life insurance quote. Some policies will stop providing cover once you reach a certain age.
- Terminal illness. Some term insurance policies may pay a lump sum if you’re diagnosed with a terminal illness during the policy.
- Consider the tax implications. Inheritance Tax may be payable on any sum paid out, unless you put your plan in a suitable trust. This can be a complicated area and tax policy can change from 1 year to the next so it’s important to get financial advice if you’re considering this.
- Flexibility. Does your life insurance policy allow you to skip a payment or two without penalty? And what happens if you want to cancel altogether?
- Cash-in value. Check whether your policy has one or not. Not all do and you may decide that you don’t want one.
- Extra benefits. Some policies may offer additional benefits such as critical illness cover.
What does life insurance costs?
Remember that the first life insurance quote you get may not be the best for your circumstances. Price really does depend on what you include and also on your age, health and whether you smoke or not. A FREE meeting with one of our specialist brokers will help you get the best life insurance quote.
You can also get all the information you need on life insurance in our FREE guide