Life Cover
What is life insurance?
If you die, life insurance pays out a lump sum, to support your family. They can then use this money for whatever they want. Most people use this to pay off their residential mortgage, however the money can also be used for other purposes such as funeral costs, other debts and childcare.
When should I review my life insurance?
You should review your life insurance after major life events such as:
Marriage
Having children
Changing jobs
Divorce
Moving house
What are the different types of cover?
Level term
The cover does not change throughout the term of the policy. The lump sum payment can be used to pay off mortgages, or for any other purpose.
Decreasing term
The cover reduces, throughout the term of the policy. This is in line with your mortgage, therefore in the event of your death, the mortgage will be paid off.
Increasing term
The cover increases with inflation. The premium also increases every year, as the cover increases. Most providers allow you to remove this element from your policy, whenever you want to.
Family Protection
Funds from the policy are used to cover family expenses. You are able to choose how long this lasts.
Who needs life insurance?
You and your partner can choose to take out separate policies, and both have independent cover, or take out a joint policy:
Single life insurance – two separate pay-outs, but also works out slightly more expensive.
Joint life insurance – one pay-out, it can be set to pay on first death or second death.
I already have life insurance with my work? Do I need to take out more life insurance?
Yes! Some employers do provide death in service benefit which will pay out if you die, whilst in employment. However, this should be seen as a bonus. Mortgages and family commitments can outlive employment, and if you were to leave that particular employer, then you may no longer have any cover. Taking life insurance out at a later age, would also be much more expensive.
How much cover do I need?
The cost of cover increases with the sum assured and the term of the policy. As a minimum, it is advisable to cover your residential mortgage. Extra cover would act as a good surplus, which would provide the family with a lump sum payment that they could use for whatever they feel suitable, at a time of need.
What factors will affect my monthly cost?