There is a range of reasons why many of us choose to buy life insurance. It could be to cover a mortgage or other types of debt, or it could be to provide a regular or one-off sum of money to ensure the policy holder's family is looked after financially. An important thing to consider when looking at the different life insurance policies available is how to get value for money and make sure that the policy will pay enough to suit the needs of those loved ones you want to protect.
An important aspect to consider is that insurers will usually offer a range of type of life insurance. Most insurers should be able to offer different types of life insurance policy, so you can decide what one would best suit you and your family's needs. A level term life insurance policy is where a one-off sum of money is paid to your family if it is claimed within a set time period, usually 5 to 40 years. If you survive beyond this period then no payment will be made. As the amount of money payable stays the same, regardless of how long you have been paying in, it can be very good value for money.
Another type of life insurance scheme is a decreasing term life insurance policy. Also known as mortgage protection insurance, the policy pays out according to the outstanding amount of your debt with the loan provider. The amount of cover will decrease the more of your mortgage is paid off, and the length of policy will usually be agreed to a set term. A renewable term policy is where on the expiry date of the insurance policy there is an option to continue, while a convertible term policy covers a set period of time with the option to change the policy. Usually you will be given the option to transfer the policy to protect mortgage payments or to a lifetime policy.
Other benefits can be added to a life insurance policy, such as critical illness cover. This is where a payment can be made if the policyholder has a critical illness. If you are not able to work and need extra support then benefits like this could be very useful for financial peace of mind.
Getting guidance on life insurance from an independent advisor can be very worthwhile, and take the time to do as much research as possible. Don't over insure – you could already have some form of cover with existing insurance policies or loans such as through your employer or mortgage provider. Ask if it is cheaper to get two separate policies or a joint policy if you are a couple, but before getting the policy make sure that the payments are fixed if you want to be sure how much you will be paying.
Life insurance can be a big investment financially and something many people could need to rely on, so make sure the insurer is regulated by the Financial Service Authority. Give as much personal information as you can, as failing to disclose necessary and accurate information could leave the policy void. It pays to shop around for life insurance, as prices can vary significantly. If you have any further questions, the insurer should be able to explain the policy clearly and simply. If they can't, then go to a life insurance provider that does.
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