Helping to provide for your nearest and dearest, and settle any outstanding debts, life insurance is one of the most important types of cover going. If you have a large mortgage or another significant loan, life insurance could help to ensure your family are able to stay in their home after your death. It can also be used to pay for your funeral, your children’s education and your family’s expenses, all things that will help to take the burden off of your loved ones if the worst should happen.
To help you decide if it’s right for you, and which policy will provide you with the best cover, here are a few of the most essential ins and outs of life insurance.
Protecting your family
Like Moneysupermarket says: “If you die while you still have dependants, being able to claim on a life insurance policy could mean the difference between your loved ones struggling to make ends meet, and their being financially secure.” Although no one wants to think about their own death, if you have a family, planning for unforeseen outcomes is essential. If you’re the sole breadwinner or the primary earner in your household, it’s even more important.
It’s important for homeowners
If you’ve bought a property with a friend or partner, life insurance will ensure your debt is covered in case of your death. If you don’t take out life insurance, the person you purchased the property with could be saddled with a mortgage they can’t pay and a property they can’t afford to keep. Taking out a policy will help to prevent your friend or partner being drawn into financial difficulty by your death.
Term insurance is the most basic type of life insurance cover. Put simply, you pay premiums to your insurer every month for a set period of time. If you die within that period, the policy will pay out. If you don’t, the policy won’t pay out and your insurer will keep your money. You can choose from either level-term policies, which pay out a fixed amount when you die, or decreasing-term policies where the amount you’re covered for goes down incrementally over time. The policy you choose will depend on your requirements and your financial circumstances.
As the name suggests, whole-of-life policies cover you for your entire life, paying out to your loved ones when you die. As it’s guaranteed you’ll die at some point, these types of policies are much more expensive than term policies. However they can be suitable for some people, especially those whose families will have a large inheritance tax bill when they die.
If you’re a homeowner, investing in life insurance is essential. To find out more about becoming a homeowner, or to learn what types of mortgage are available to you, take a look around today.
Please be aware that by clicking on to the above links you are leaving the Perception Finance Limited website. Please note that Perception Finance Limited are not responsible for the accuracy of the information contained within the linked site(s) accessible from this page.
Written by: Andrew Page