Life insurance can give you peace of mind that should anything happen to you, your family will be financially secure. The worst-case scenario is when the people you love are left struggling to make payments, whilst also grieving for a personal loss.
The last of our free guides from our financial guides series is designed to help you understand the differences in life insurance policies, deciding how much cover you might need and why starting earlier will save you money.
When to take out a life insurance policy
The decision to take out a life insurance policy tends to coincide with a milestone in your life. This is often when you have children or buy a property, and ultimately, you don’t want to leave debt to your loved ones should anything happen to you.
This important reassurance will only become more costly the longer you leave it.
According to Scottish Widows, only 50% of mortgage holders have life insurance cover and “a fifth of mortgage holders said they had no idea how they would cover their household bills if they or their partner were unable to work due to incapacity, serious illness, an accident or death.”
If you were to die tomorrow, would your family be able to afford household bills and general costs of living without your income? If you haven’t thought about this before or would like a solution, it’s time to look into your life insurance options.
What does life insurance cover?
One of the best things about investing in life insurance is how it can be tailored to your needs. So if you’re thinking about anything from providing an education for your children, to covering the cost of the outstanding mortgage, there will be a policy for you.
The two main types of life insurance are term and whole life. A term-based policy covers a fixed period – so if you out-live this term, then the policy terminates. You make payments for whole life policies throughout your entire life, and these will inevitably pay out on death. Whole life is therefore a more expensive option but is also more beneficial.
An additional cover to consider as part of your life insurance policy is critical illness cover. This has the added benefits of paying out should you be unable to work due to serious illness.
Life Insurance Advice from Newcastle upon Tyne IFA Laurus Associates
Laurus Associates director Colin Dawson said: “Life insurance is an essential area of financial planning. It’s one of the most valuable forms of insurance, and works out relatively cheap considering the benefits.
“Most people seek advice because there are so many different forms of cover and these can be tailored to suit your needs. Reviewing your financial circumstances and working out how much your family might need to live on can be tricky to calculate without help.
“When it comes to applying, the cost of life insurance does go up the older you get. The time to do it is when you are young enough and fit enough to get a good deal. It will be far more difficult and costly to do if you are in poor health.
“After getting your life insurance set up, you should always revisit your options because your circumstances can and will change throughout life. Maybe you set it up before you had children or maybe you’ve changed jobs and your income has changed, or maybe you would like to add critical illness cover to your policy.
“Just make sure when taking out your policy that you answer all of the questions honestly. If you are unsure on any question, take the time to do some research, even if this means checking back over your own medical records. You don’t want to have paid for insurance your whole life only to have your family’s claim declined due to misrepresentation.
“Seeking professional advice will help you to find the right policy to suit yours and your family’s needs, giving you the reassurance that you can still provide for the people you care about when you are no longer here.”
Get your free guide to life insurance
You can now get your free guide to life insurance below. This will help you understand the basics of life insurance, setting you on the path to getting that essential cover and much-needed reassurance.
Your guide includes:
Deciding how much cover you need
Knowing the difference between term and whole life insurance
Critical illness cover
Top tips to get you started
Click here to view the free Laurus Associates Guide to Life Insurance
The Laurus Associates Guide Series – view them all here
Our free, guide series is now available to access in full by clicking here.
The guides are on four of the most central topics to your financial planning. Get clued up on each of these essential aspects:
If you would like professional advice speak to Karen or Colin on 0191 281 1234 or email firstname.lastname@example.org to discuss the best life insurance policies, pensions, ISAs or inheritance tax planning options to suit your needs.