Unfortunately, one in 29 children loses a parent before they are 18. This grief is often accompanied by financial struggle, as many have not purchased a life insurance plan. It is very easy to find one though, and is one of the easiest and cheapest ways to protect your family. However, it is easy to pay £1000s more than you need to, and in this guide, we will tell you how to not overpay and how to get the best deal.
1. Level term Life Insurance pays a set amount if you die within a fixed term.
The simplest type of life insurance
Level- Pay-out doesn’t vary whether you die within the term or not.
Term- You only get a pay-out if you die within a fixed term, e.g. 18 years.
Simply, if you die within the set amount of years, you will get payed. Obviously, the more protection and longer term you want the more it will cost. Bear in mind that the company will only pay out on death, but there is little dispute whether someone is dead or not.
2. You don’t need life insurance if you have no dependents.
If you have no dependents, there is no point in getting insured as this is all about paying when you are gone. If you do have dependants like a partner or kids, think about what their financial situation would be like if you died. If this is not much different to right now then you would not need cover. However, if shopping, paying bill and the mortgage would be a strain you should consider insurance.
3. The less risk of dying you have, the cheaper the insurance.
The cost of cover can be increased while you age, or if you have unhealthy habits such as smoking. However, it is important to disclose everything, as failure to do this may result in your insurer claiming that you broke their terms of service and will not pay-out. If you have pre-existing medical conditions, speak to a broker as they will know the best rates for life insurance based on your personal issues.
4. Write your policy in trust to avoid inheritance tax.
When you die, your policy forms part of your estate which means the taxman can claim a lot of it through inheritance tax. If you write it in trust, it will avoid this and the pay-out will go straight to your descendants. Most insurance firms offer forms to write your policy in trust at no extra charge.
5. Everyone is different.
Everyone will have different needs and options for their life insurance policy, so to help you with this important decision we are attaching a life insurance calculator. This will help you see how much your cover should cost and what factors determine this price.
These are the top tips to know about before purchasing life insurance. Remember to find the best deal for you and check out our other for articles for help on insurance. Click here to get the ultimate guide to car insurance
Thanks for reading.