Life insurance is a simple way of making sure your family is financially protected for years to come. This way, if you pass away at any stage, your family can cover costs they may otherwise depend on you to pay for. The type of life insurance policy you need depends on lifestyle factors, such as whether you’re single or married, or if you have children.
Benefits of owning a life insurance policy
There are plenty of benefits to having a life insurance policy, including peace of mind. Here are some of the main ones:
Protecting Your Family – If something happens to you, your family will receive a lump sum payment. This means they won’t have to worry about paying down your debts, repaying loans, or covering household bills. Your family can then focus on getting back on their feet.
Providing Financial Support – If you die before reaching retirement age, your beneficiaries will get an inheritance. This means they can use the money to help with things like buying a house, sending their children to university, or even starting a new business.
Which Type Of Life Insurance Policy Is Right For Me?
The first thing you should consider when choosing a life insurance policy is the level of coverage you need. But before you decide which type of policy is right for you, here’s a look at the two main options available.
Term life insurance
A term life insurance policy provides protection against death for a specific period of time. Typically, these policies last between 10 and 30 years. Although they are cheaper than other types of cover, the policy only pays out if you die within the policy term. Once you reach the end of the term, the policy expires. In this case, you won’t receive compensation for the premiums paid up to this point.
Whole life insurance
With a whole life policy, you protect yourself for the rest of your life. These policies usually cost more than term policies, but they virtually guarantee your family a lump sum payout regardless of when you die. Another benefit of whole life insurance is that both the payout value and premium rate remain fixed throughout the policy.
Other types of policies
There are also other types of policies, such as joint life insurance and critical illness cover.
A joint policy covers two people under one policy, it can also work out cheaper than buying separate policies. This type of policy is ideal for couples who share an income or financial disputes like a mortgage.
Critical illness insurance isn’t a life insurance policy, but more to cover you and your family should you become seriously ill or injured. This policy pays out enough money to allow you to cover bills and other expenses you might struggle to pay if you can’t work.
Work out how much cover your family needs
Once you know which type of policy you want to buy, you need to figure out how much cover is needed. This will depend on several factors, such as how old you are, whether you have children, and how long you expect to live. If you don’t have any kids yet, you probably won’t need as much coverage. But if you already have children, you’ll likely need enough coverage to cover future costs, such as college tuition and living expenses.
Here are some other costs that can be covered by life insurance:
● Household bills
● Mortgage repayments
● Debts
● Childcare support
● Funeral costs
● Medical expenses
Essentially, you should consider how much your family relies on your active and passive income. For example, if your spouse has a job and lots of savings, they won’t need a large amount of cover. On the other, if your family depends on you to cover their expenses, they’ll likely need a larger amount of cover.
How much will my monthly premiums be?
The next step in deciding what kind of policy you need is figuring out how much you’re going to pay each month. You can do this by comparing quotes from different companies. It’s important to shop around, as many factors can affect your premium rates. Some of these include:
● Your age
● Health
● Medical history
● Whether you smoke
● The type of policy you choose
● The length of the policy term
It also depends on the insurance companies, as some providers may offer lower quotes than others for the same cover. However, just because they offer cheap quotes doesn’t mean you should buy from them. You should read reviews to make sure the company is reputable and will honour your policy.
You should start thinking about taking out a life insurance policy once you’ve got a good idea of how much coverage you need. The earlier you start, the better – this is when premiums tend to be at their lowest. If you wait until you’re older, you could find that premiums are much higher. For more information, get in touch with your chosen life insurance provider.