Choosing the Right Life Insurance Policy | Money Saving Advisors
Tips for selecting a life insurance policy that best protects your loved ones and fits your budget.
Related articles
What is life insurance?
If the worst comes to the worst, life insurance can be a true lifeline for your loved ones. It offers a cash lump sum when you're no longer around, which they can spend on funeral costs, mortgage payments, and everyday expenses. But every family is different, so you'll need to be sure your policy will support them in the way you'd want.
Placeholder Intro Content
Choosing a life insurance plan
Understand your needs
When deciding on life insurance, first think about why you need it. How much cover you'll want depends on your situation. Some factors to consider include:
- Your mortgage: If you have a standard repayment mortgage, life insurance should cover the outstanding balance.
- Your children: If you have young children, consider a policy that'll help cover their school fees or student loans.
- Living expenses: Consider how much financial support your family would need, to cover their standard of living now and any future costs.
Types of life insurance policies
There are several types of life insurance, each suited to different needs. Choose one that best fits your lifestyle and long-term goals.
- Term life insurance: This covers a specific period, such as 20 or 30 years. If you want to protect your family until your mortgage is paid off or your children are independent, term life might be the right choice. It's also often the most affordable.
- Whole life insurance: This offers lifelong coverage, plus it builds up a cash value over time. It's more expensive, but it can provide long-term security, especially if you want your family to be protected for life.
- Family life insurance: While all policies are built to protect your loved ones, this particular wording focuses on the breadwinner's role and the family's specific needs, such as income replacement, paying off debts, and education.
- Decreasing term life insurance: Designed to cover a repayment mortgage, the payout here decreases over time, in line with your decreasing mortgage balance. This makes it a cost-effective option for mortgage protection.
- Joint life insurance: This covers two people under one policy. It offers a lump sum payment with the death of the first partner, typically to help the surviving partner with living expenses or debts. The policy ends after the first payout.
Summing up
Choosing the right life insurance is about more than just picking a plan. It's about understanding your needs and the kind of protection that works for your loved ones. Whether you're looking for a critical illness cover add-on or full life assurance, take the time to research and look at your finances, so you're confident in the future you're securing for your family.
Ready to find the right life insurance policy?
Frequently Asked Questions
What are some life insurance pros and cons?
Life insurance means financial security for your loved ones, helping to cover debts, expenses, and future needs if you pass away. It offers peace of mind, knowing your family won't face financial hardship. The cons include the cost, which can be high depending on your age, health, and the type of policy. If you outlive the policy (especially with term life insurance), you might not get any benefits.
How do I know how much life insurance I need?
To calculate this, consider factors like your debts, how much income you'd need to replace, and any future expenses, such as your children's schooling. It's important to choose coverage that gives your family the right level of support after you're gone. Comparison sites and financial advisors can also help you with the calculation.
can-i-change-my-life-insurance-policy-later
Many policies are flexible, so you can change your coverage later if needed. You might be able to increase or reduce the amount of coverage, or switch to a different policy type. But when adjusting your plan, keep in mind that your monthly premium could change based on your age, health, and other factors.
How much does life insurance cost?
When you buy life insurance, the cost is based on things like your age, health, coverage amount, and the type of policy. Generally, term life insurance is cheaper than whole life, and premiums increase as you age. To get an accurate quote, it's best to shop around and compare policies from different insurers. Also bear in mind there may be tax liabilities for your heirs, unless the policy is written in trust.
Articles that might interest you
Life Insurance for Seniors | Money Saving Advisors
Discover life insurance plans suitable for seniors. Cover final expenses or leave a legacy with policies designed for older ages.
Terminal Illness Cover | Money Saving Advisors
Understand terminal illness cover (often included in life insurance) that pays out early if you are diagnosed with a terminal illness.
Life Insurance Calculator | Money Saving Advisors
Calculate how much life insurance you may need. Adjust for income, debts, and family needs with our calculator.
