29th October 2019
Life Insurance financially protects your loved ones when you pass away within the policy term. Dependent on your cover, it can ensure that any outstanding debt, like the mortgage, can be paid for, as well as general living costs.
This is the most common type of Life Insurance policy and ensures that your loved ones receive a pay out only if you die within the policy term. For example, if you take out a term policy that lasts 20 years, your loved ones can only claim if you die within these 20 years.
This is completely up to you however it is often clients are guided by the amount of time left on their mortgage repayments or the age of their children – ensuring that the policy lasts until they are 18 years old or expected to be self sufficient.
This is a policy that is not guided by a fixed term – your loved ones will receive a pay out whenever you die. This policy is usually more expensive because of this.
It can be helpful to work with a broker to establish the appropriate amount of cover but it is usually guided by outstanding debts, lifestyle costs for remaining family members, including the associated costs of bringing up children. These calculations should be carefully considered to ensure your loved ones are financially secure in the way they need to be.
The policy premium is determined by many factors, including your age, health, occupation (whether it carries risk or not), the amount you want to be covered for and the length of your policy term.
If you have a serious condition it can be difficult to find an insurer who is happy to cover you. There are specialist insurers who might but these will come at a higher monthly premium. Otherwise, some insurers will cover you but the condition would be excluded from your policy meaning that, if you did die from it, your loved ones would not receive a pay out.
If you are a Director of your own limited company you can pay for your Life Insurance premium through your company, saving you money. Read more about tax efficient Relevant Life Insurance here.
If you have any more questions or what to speak to an expert adviser, get in touch here.
All content is accurate at the time of publication
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