What is Life Insurance?
Life insurance, which is sometimes known as life assurance, provides financial security for your loved ones in the event of your death. Depending on the type of policy you choose, a lump sum payment will be made to your dependents which will provide them with a substitute for your income. This could settle any debts such as mortgages or outstanding loans.
Do I Need Life Insurance?
This is a question that many don't want to think about, but if you have dependents, a mortgage or financial commitments, it is advisable to have life insurance. If anything was to happen to you and you didn't have life insurance, your family may struggle, especially if you are the main breadwinner. Having a life insurance policy will give you peace of mind that your dependents will be financially provided for should you die within the policy term.
Will I be Eligible for Life Insurance?
Anyone over the age of eighteen should be eligible to take out life insurance.
Can I Afford Life Insurance?
Life insurance costs will vary depending on your own individual circumstances and the policy which you take out. However, premiums could be as low as the equivalent of buying two coffees per week.
What Will Affect the Amount I Pay for my Life Insurance Premium?
There are many factors regarding your lifestyle that will influence the cost of your life insurance policy. The amount you pay will depend on your age, gender, medical history, whether you are a smoker and the type of cover you choose for your life insurance.
How Much Life Insurance will I Need?
This will depend on your circumstances. You may want your policy to leave a lump sum for your dependents or help to pay off an outstanding mortgage or any debts in the event of your death.
What is the Best Time to get Life Insurance?
The younger you are, the better, as policy premiums rise with age. It is also advisable to get a policy when you are younger as you can then pay a lower monthly cost which you can lock in. Costs are lower when you are younger as you are likely to be in good health.
Furthermore, policies for older people can also be harder to get accepted into.
Is Life Insurance for Life?
Life insurance doesn't need to be for life, or at least you needn't stay with the same provider. It is always worth looking around to see if there are better deals out there and this is something you should do every few years. It is also recommended that you review your cover if you have a lifestyle change such as moving house, having children, increasing the size of your family, changing jobs etc.
Will there be any Penalties for Switching Companies?
There shouldn't be any penalties, but it is always advisable to check the terms and conditions before taking out your policy if you think you may switch in the future.
What Type of Life Insurance is best for me?
The most suitable type of life insurance for you will depend on your circumstances. There are term policies which would cover you over a fixed period of time; for example, you could get a 20 year policy where your dependents would receive a pay-out if you were to die within those 20 years. Also, there are whole insurance policies which would cover you for your whole life. The advantage is that the younger you start the policy, the lower the rates will be, and these rates will remain the same throughout the years. This type of cover makes it easier for you to budget for your future.
To find the policy that suits your lifestyle, you could look online or speak to an independent financial advisor for a quote tailored to your specific requirements. Remember to compare quotes to ensure that you are not paying too much.
Will My Life Insurance Pay-out be Liable for Tax?
In the event of your death, any life insurance policies you hold will form part of your estate. However, it is possible to arrange that your life insurance policy does not form part of your estate by declaring the policy 'in trust'. This will ensure that the money goes directly to the benefactor, therefore bypassing your estate. This can be easily set up by your solicitor or independent financial advisor.