Life Insurance Tips and Guides
We all like to think that our family would be protected should the worst happen to us. Whether it’s to cover a mortgage, or simply to ensure that your loved ones have something in their pockets, life insurance can help to make a difficult time easier.
What is life insurance?
Life insurance or ‘term assurance’ is a policy that will pay out a lump sum if the policyholder dies during the term of the policy and is designed to give the policyholder’s dependents financial reassurance if the worst was to happen. This money can be especially useful to cover expensive funeral bills, clear debts and to cover mortgage payments along with regular bills if required.
Each life cover policy will come with a fixed term length. This can be specified by the policyholder when applying for life insurance. The term of the policy specifies how long it will run for. So for example if you take on a life insurance policy with a term of 15 years, the policy will only pay out if you were to die within 15 years of taking the policy.
When deciding what type of life insurance policy is most suitable for your needs, there are two key types of policy you should consider, level and decreasing (also known as mortgage) term insurance. A level term policy is fixed at a set amount. No matter how far into the term of the policy that a claim is made, the amount paid out will be the same. A decreasing or mortgage policy varies in that it is bought to pay off the cost of a mortgage if the policyholder was to die. As a result the amount paid out in the event of a claim will decrease over time roughly in line with the balance remaining on the mortgage.
Check out the tabs above to find out more about why you may need life insurance, what factors you should consider when buying it and what critical illness policies cover.
Why do I need life insurance?
No one wants to leave their family unprepared for the future if the worst was to happen. Taking a few minutes out to get a life insurance quote not only provides you with peace of mind, with our comparison tool it is also quick and easy. However, should you need further help in deciding which life cover options are right for you, read our guide to finding the best policy for your circumstances.
Here’s some of the main advantages of taking out a life insurance policy.
- To pay off outstanding debts. If you have any debts that would remain unpaid in the event of your death, a life insurance policy can be used to pay these off.
- To replace lost income. If your family are reliant on your income, a life insurance policy can provide the security of knowing that they will continue to receive this income in the event of death.
- To pay final expenses. This includes funeral and medical costs.
- To pay for your children’s education.
What do I need to consider when I compare life insurance?
When considering purchasing a life insurance policy, always take the following into account:
The Term – How long do you want the policy to run for?
The amount – Balance off the amount you can afford in monthly payments against the payout you would require if you had to make a claim. Make your amount too small and you may struggle to get by in the event that you need to claim on your life cover. Similarly, you don’t want to stretch yourself by paying out too much in monthly payments if you won’t require the full amount to cover your costs in the event of a claim.
Whether to add Critical Illness – This could be a worthwhile addition to your policy especially if you have a history of illnesses in the family.
What is Critical Illness cover?
Critical illness insurance can be bought as a standalone policy or bolted on to existing life insurance cover. Critical illness will pay out a lump sum in the event that you are diagnosed with a serious illness. The range of conditions covered varies from policy to policy; however most will cover the more common serious illnesses such as common cancers and heart attacks.
Critical illness cover can prove to be a more suitable policy than life assurance if you have no dependents and just want to make sure that your mortgage payments and medical treatment costs are covered. That said, it’s usually no more expensive to take out life insurance with your cover than it is to take out a standalone critical illness policy, so most people opt for critical illness as a bolt-on to life insurance rather than a standalone policy.
More Life Insurance Options
Depending on your circumstances, you may find that our standard life insurance policy options may not adequately cover you in the way you desire. If this is the case, you may need to consider some of our more specialised term assurance solutions which can provide you with a level of cover more suitable to your situation.
Why compare life insurance with moneysupermarket.com?
If you are considering buying a house, many mortgage lenders will not offer to lend you the capital without some form of life insurance. In this situation moneysupermarket.com’s life insurance comparison tool can help you not only secure your home, it can also save you money on your term cover.
We have teamed with a great selection of insurance providers to ensure that we can offer you some of the best life insurance deals possible, meaning your family are protected financially should you die.
The advantages of life insurance
Life insurance policies can also be set up in order to provide a lump sum to your loved ones in the event of your passing - this will cover expenses such as your funeral and leave them the money to carry on without you.
Life insurance policies can be altered dependant on your needs: A policy can be paid for over the same period of time as your mortgage, or in some cases the policy will be set up to cover the rest of your life - this is known as whole of life insurance. Depending on your circumstances, some life insurance covers can be set at a fixed premium for the entire life of the policy, whereas some become more expensive each as year as you get older.
What to look for in a life insurance policy
Like all insurance policies, term assurance is extremely important - and as such you should always make sure that cheap life insurance quote does exactly what you want it to.
For example, is the policy a decreasing term, meaning that each year the amount insured decreases to match your mortgage payments, or do you want a large lump sum to leave your family? Decreasing term means your premiums may be lower, but may not provide the cover you require - these are all things you chould consider when you compare life insurance quotes.
Depending on your medical history, some providers may also exclude certain illnesses or conditions from their terms, and as such you should always read the small print before signing up to a policy.
