Understanding Life Insurance.

If you're a homeowner, parent or your household's main earner you may be wondering if life insurance is right for you. Whether you need cover and, if you do, what specific policy type you'll need will depend on your current circumstances and what you're hoping to protect. Let's explore what options are available, what they involve and what they could do for you and your loved ones.

How Life Insurance works

Life Insurance is designed to pay out a tax-free lump sum (or regular income) to your chosen beneficiaries in the event of your death. You choose your beneficiaries (usually your spouse, children and/or other immediate family/ dependants) when setting up your policy.

You will also choose a 'term' for your policy i.e. how many years you want the policy to be in place for. A 'term policy' is mostly aimed at people who want cover in place while they have an outstanding mortgage or other financial responsibilities that need covering for a set amount of time.

Some people opt for 'whole of life' policies, which, as the name suggests, will cover you for your whole life (as opposed to a specified term). Whole of Life policies come with higher premiums as the payout is guaranteed.

Is Life Insurance right for me?

The simplest way to ascertain if life insurance is right for you is to ask yourself - would my loved ones suffer financially if I was no longer able to provide for them? If the answer is yes, then a policy could provide you all with peace of mind that they'll be protected should the worst happen.

What can you protect?

You can tailor life insurance to protect exactly what you want. The most common things to protect are;

  • Your mortgage; you can match your policy to cover the amount remaining on your mortgage. This will mean that your family are able to clear the mortgage and ultimately stay in their home should the worst happen to you.
  • Other debt; you can also include any other debt/ commitments that would otherwise become the responsibility of your loved ones if you were to pass away.
  • Funeral expenses; some people choose to factor in the cost of a funeral into their policy to keep that financial burden off their family during what will already be a very difficult time.
  • Educational costs; some parents choose to include lump sums to cover future educational costs for their children should they not be around to help when needed.
  • Lifestyle costs; you can include a lump sum/ income to enable your loved ones to continue the same lifestyle they're used to.

How much does Life Insurance cost?

As mentioned above, life insurance can be tailored to your needs - and this includes your budget. There are however, a lot of factors that can influence the cost of a policy, this includes but is not limited to;

Level of cover

Unsurprisingly, the more you want a policy to pay out, the more the premiums will be.

Your age

From a providers point of view, the younger you are the less likely they are to have to pay out during the policy term.

Your health

You'll be asked about current and past health, whether you smoke/ drink and your family history.

Ready to speak with a protection adviser?

Give us a call today or drop us a quick message here and we'll be more than happy to help.

01843 228800