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 GBP6 per month.
