Considering your own mortality is never a pleasant thing to have to do, but when it comes to financial planning for your family it is unavoidable.
If you are the family’s primary breadwinner – or even a secondary wage earner – you are sure to want to take steps to ensure they can cope financially in the event of your death, so at some point you will need to think about taking out life insurance cover.
The concept of life insurance is simple – you pay premiums and in return the insurer will make a payment to your named beneficiaries in the event of your death. This can help to ensure they can pay off the mortgage or other essential bills, such as childcare and schools fees.
However, the reality of choosing the right type of policy and obtaining life insurance quotes can be more complicated.
There are a number of different kinds of life insurance products on the market and it can be a good idea to seek help from a qualified and reputable intermediary or adviser as you try to work out which is the right choice for you.
The simplest product is known as level-term insurance, which will pay out a pre-agreed sum if you die during the term of the policy. This will allow you to ensure your family have enough money to cope with everyday living expenses if the worst happens.
You may also want to consider increasing-term or index-linked term insurance – two forms of life insurance that see the sum assured rise during the policy to combat the impact of inflation. But remember, as the sum increases, the premiums are also likely to climb.
Another common product is decreasing-term insurance, also known as mortgage protection. With this type of policy the sum decreases during its life, as it is designed to cover the outstanding capital and interest payments on a mortgage.
Once you have decided on the right type of product, you will also have to think about the amount of cover you need and the level of premium you can afford before starting to search for the best deals.
When comparing the policies on offer it is important to remember that some cheap life insurance policies do not represent good value. If you are not confident about your ability to compare product features, you may wish to seek the help of an intermediary.
