What is life insurance?
Life insurance can offer peace of mind that loved ones will be cared for financially after you die.
There are a variety of policies available to suit varying circumstances and requirements with the insurance policy paying out a cash lump sum or monthly income when you pass away.
Most policies can be taken out once you turn 18, but some will have different age restrictions applied to them.
Consider how much a policy will pay out, how long it lasts and who the payment will go to in the evet of your death.
Whatâ€™s the best way to get a policy?
As with most insurance policies, itâ€™s best practice to shop around and get quotes from insurers.
There are a number of influencing factors when choosing a policy. Most insurers will allow you to select a policy based on the total payout you want or the amount you can afford to contribute monthly.
How much you pay in on a monthly basis will ultimately determine the payout amount, so the higher your monthly premium the higher the cash sum will be for your beneficiaries.
What are the different types of life insurance policies?
Term Life Insurance
- This policy could be a great option if you are healthy and meet the criteria to be accepted. It can mean that you minimise the risk of paying more in premiums than your recipient will receive in final pay out.
Whole Life Insurance
- In a nutshell, there arenâ€™t any term restrictions with this type of life insurance as the insurance will pay out whenever you die. It is worth noting that whole life insurance can be harder to secure the older you are due to your life expectancy and health.
Over 50s Life Insurance
- An over 50s life insurance policy is an option to consider if you have suffered from health problems as you are guaranteed acceptance. The policy offers a fixed payout based on the monthly premium payments which you set based upon what you can afford.
Do I need it?
This is a question you need to weigh up for yourself as it depends entirely on your priorities and personal circumstances.
For example, if you own your own home and have a mortgage to pay a life insurance policy could offer a lump sum of money in the event of your death, which could clear the mortgage and remove some financial stress for your loved ones.
Alternatively you may wish to leave money for your children in order to help support them with their finances.
There is lots to consider when selecting a life insurance policy, you will also need to think about the following implications:
- Bigger lump sums require you to pay higher monthly premiums
- Your age will impact on your monthly costs as the older you are the more expensive it is likely to be
- Smokers may find it difficult to get policy cover and policies which do cover smokers will cost be more expensive