Life Insurance: Why Bother?
Life Insurance: Why Bother?
For anyone with a family, taking out life insurance is essential. There are many different life insurance offers on the market, but the principle is the same across all of them - in the event of your death your dependants will receive a sum of money as a replacement for your earning power. If you don’t have children and are single, you probably won’t need life insurance, unless you are caring for parents who don’t have a sufficient pension to get them through. It’s worth bearing this in mind as it won’t stop brokers and IFA’s - always on the hunt for big commissions - from trying to sell you a policy. Be wary of organisations trying to sell you life insurance when you don’t have a very good reason to take it out.
Summary of Cover
You decide on a sum insured and a term of years from the outset. The sum insured remains constant throughout the term.
- The sum has no investment content.
- If you die during the term then the sum insured is paid out.
- Can be set up as a single life plan, insuring one life for a predetermined sum and term, or as a joint life first death plan, where the sum insured is payable on the first death.
- Critical illness or terminal illness benefit can be added to most plans, wherein the sum is paid in the event of illness
- As soon as the sum insured is paid out the plan ceases. If you survive the term then nothing is paid out and the plan ceases.
- Life insurance gets more expensive the older you become. If you set a fixed sum level term assurance then you will know exactly the figure your beneficiaries will receive. The downside of this is the fee will become less valuable with inflation, but at least you won’t be stung for a huge premium when you’re older. You may decide that you want to invest your money in another scheme for the future benefit of your loved ones.
There are a multitude of life insurance providers to choose from and you’d be well advised to scout around for the most competitive deals. You could start with Legal & General who offer life insurance from only ?6 per month.
