If you ever worried how your dependants would cope financially if you died, then having a life insurance policy makes sense. The concept of life insurance is simple, if you should die unexpectedly then a lump sum is paid out to meet the financial needs of your dependants.
Do you need life insurance?
If you are the main source of income in your household then you need life insurance. Even if you are not the main wage earner, then your income may be needed to maintain your lifestyle and pay bills. If you passed away, then your dependants would need to greatly restrict their budgets, should you not be covered.
If you are a stay at home parent, the chances are that you do not earn a salary. If you died, then your partner could face the extra financial burden of paying for childcare or they may have to leave work to look after the children. In this case, life insurance could provide the necessary financial assistance.
What are the different types of life insurance?
There are different types of life insurance available, The most popular is level term life insurance. The level term policy has a set term and pays out the same amount whenever you die. The term can be set from 10 years to 25 years or more.
Decreasing term life insurance decreases the amount that is paid out over time. This type of policy is usually taken out to cover paying off a mortgage whose outstanding amount decreases over time.
Whole of life cover lasts for your whole life and, although more expensive to take out, will pay a guaranteed sum.
You can also add on various other extra items, such as not having to keep up payments if you are off work through sickness. You can also purchase joint policies that cover a couple.
What is not covered
A life insurance policy, as it names implies, only pays out at death. If you suffer financially because you are sick or injured then income protection or critical illness insurance will cover these risks. Mortgage protection is insurance that is available to cover the mortgage payments if you are sick or have an accident that prevents you from working.
You should consider purchasing one or more of these other insurance policies in addition to life insurance to protect yourself from a wide range of risks.
What’s the cost?
The cost of life insurance depends on your age and health. Smokers will be required to pay more, You will need to disclose any pre-existing medical conditions.
The cost of a policy is also based on the type of cover and the amount covered, An insurance broker can discuss the various options available and work out the cost of a suitable policy.
Where to buy life insurance
The best place to purchase life insurance is through a broker. A broker has access to many policies that are not available from individuals going directly to an insurance provider or on price comparison websites,
Contact Ascot Mortgages today to discuss your life insurance requirements.
