What is life insurance?
At its simplest, life insurance will pay out a sum of money to your loved ones if you die. This is to give you peace of mind that basics such as your mortgage, child care costs, and even funeral expenses, are taken care of when you’re not around.
Who needs life insurance?
Life Insurance For Couples
Do you have joint financial responsibilities, such as your home? You might want to make sure that if you die prematurely your partner can continue to live in the home you have worked hard to build together. Can they afford the mortgage/rent and bills without your income?
Life Insurance For Families
As well as clearing debts and helping pay the bills, life insurance can help to cover the cost of raising your children. Research done by AVIVA is 2015 showed that parents spend £585 a month raising their little ones until they are 5 years old. Would your family be able to afford these expenses if you weren’t around?
What types of life insurance are available?
Level Term Insurance
This means the amount of cover you take never changes. So, if you have £100,000 cover, for example, your family would always receive that if you die. Level cover is usually set up to cover debts that aren’t decreasing, or to provide additional cover for your family, above and beyond the mortgage.
Decreasing Term Insurance
This means the amount of cover you take reduces each year. This would usually be taken if you have a mortgage where the amount you owe reduces each year.
Monthly Income Insurance
Life insurance can also be paid monthly. This is known as ‘family income benefit’. This would pay money to your spouse every month so they can pay the bills and the costs of raising your children.
How much do you need?
Everyone has different financial and personal circumstances. Any life insurance you take should be tailored so that is does exactly what you want it to.
As financial advisers, we’ll look at your mortgage (or rent payments), bills and family costs and then recommend cover that is perfect for you.