Not many people will relish the idea of taking out life insurance after all, few of us will like to be reminded of our own mortality! However, this is by no means an excuse for not giving it our serious consideration. We should always make a point of having plenty of safeguards in place and that is exactly what life cover is!
Here are 3 of the most common questions that people will ask regarding this type of insurance.
1. Who needs to take out life cover?
If the worst ever does happen, then the majority of us will have relatives who will be financially affected (and when you are a parent, this is blatantly obvious!)
In the wake of a tragedy, there will be more than enough pain and loss for your family to deal with without them having any financial concerns as well.
Having life cover in place will certainly not take away all of the hurt and upset, but it will give your loved ones far less to worry about at this awful time.
2. Where is the best (and cheapest) place to find this type of insurance?
Insurance policies can be found just about anywhere these days and we are able to purchase cover in all manner of different locations; at the bank, the Post Office or even the supermarket!
In fact, it would be far easier to make a list of the places where insurance cover cannot be taken out!
However, on the whole, the best insurance deals will be found on the internet, from specialist companies such as Lifesearch.co.uk.
You can also use a comparison site, such as Moneysupermarket.com or Comparethemarket.com.
However, if you don’t need advice, you can also buy through a discount broker and this is a way to save money when buying life insurance.
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A discount broker will charge you a fee but will then rebate you all the commission they earn from the insurer. In contrast to others who take this commission for themselves.
Example discount brokers include Cavendisholine.co.uk. There’s also Godirect.co.uk who on their website say ‘With our online life insurance quote system we rebate a minimum of 50% of the initial commission the life assurance company would pay us back into your policy there by reducing your monthly premiums.’
3. When should you consider taking out life cover?
Ideally, anyone with a family should have some form of life insurance in place!
This type of cover can never be organised too soon either. None of us can be sure of what is waiting around the corner and life has a habit of containing a great many surprises. Unfortunately, not all of these will be pleasant ones so it is important for us to be prepared for any eventuality.
FREQUENTLY ASKED QUESTIONS (FAQ)
What is life insurance and why do I need it?
Life insurance is a financial safety net that provides a payout to your beneficiaries in the event of your death. It helps ensure that your loved ones are financially secure, covering expenses such as funeral costs, outstanding debts, mortgage payments, and daily living expenses. Having life insurance is essential for protecting your family’s financial future and preventing them from being burdened by unexpected expenses.
How does life insurance work?
Life insurance works by paying regular premiums to an insurance company in exchange for coverage. Upon your death, the insurance company pays a lump sum (called the death benefit) to your designated beneficiaries. The amount of coverage depends on your policy, and your beneficiaries can use the funds to meet financial needs, such as paying off debt, covering educational costs, or managing household expenses.
What are the different types of life insurance?
There are two main types of life insurance:
- Term Life Insurance: Provides coverage for a specific period (e.g., 10, 20, or 30 years) and is generally more affordable. It pays a death benefit only if the insured dies within the term.
- Permanent Life Insurance: Offers lifelong coverage and includes options such as whole life or universal life insurance. These policies usually have a cash value component that grows over time and can be accessed by the policyholder while alive.
How much life insurance do I need?
The amount of life insurance you need depends on various factors, such as your income, debts, living expenses, and the financial goals you have for your family. A general rule is to aim for coverage that is 5 to 10 times your annual salary. However, it’s best to assess your specific situation, considering factors like future education costs, mortgage payments, and other long-term financial obligations.
What happens if I outlive my term life insurance policy?
If you outlive your term life insurance policy, the coverage expires, and no benefits are paid out. At that point, you have the option to renew the policy, purchase a new policy, or convert it to a permanent life insurance policy, depending on the insurer’s terms. Keep in mind that premiums for a new policy might be higher due to your age and health at the time of renewal.
