Nobody likes to think about the prospect of death. However, sadly, it is something we have to think about in order to ensure that our loved ones are protected when we’re no longer around.
This is where life insurance comes in: it can be used to help cover medical expenses, funeral costs and future living expenses for your dependents when you pass away. To help you decide whether life insurance is right for you, in this post we’ll cover everything you need to know about life insurance, including how to choose a provider, how to choose the right amount of life insurance and the types of life insurance available.
Choosing an insurance provider
Life insurance is an incredibly popular financial product, and as a result, the market is filled with providers. In fact, according to the Association of British Insurers, there are more than 400 providers currently operating. Due to this, it’s worth doing your research before you choose your provider – after all, the cheapest provider on the market may not be the best one for you. As Feefo’s reviews of Royal London show, sometimes paying a little bit more for your policy can be beneficial, as you’ll receive a better standard of customer service in the event that the worst-case scenario happens.
Choosing the right amount of life insurance
Choosing the right amount of life insurance is tricky and you’ll probably find that your needs change over time. As a result, you should regularly review your life insurance policy to see whether it’s still right for you.
For example, if you’re young and single then you may only need a small amount of life insurance. Generally speaking, people in this situation choose just enough to cover their burial costs. After all, according to the Money Advice Service, the average burial costs around £4,000, so it’s a significant sum of money for your family to pay if you don’t have a cover.
However, if you’re older and have a family with dependents, then you’ll need more cover. This is because your family will be left without your income to support them. So, as well as covering your burial costs, you’ll also need to make sure your family receives a sizeable lump sum of cash.
Choosing the right type of life insurance policy
Once you’ve decided on the amount of life insurance you need, you also need to select your policy type. Generally speaking, life insurance policies fall under two main categories:
Fixed-Term Life Insurance
This is a life insurance policy that’s taken out for a certain number of years. For example, if you have a fixed-term mortgage that lasts for the next five years, you may take out a five-year life insurance policy to match.
As the policy lasts for a certain length of time rather than for your whole life, premiums are more affordable than others. However, remember that when your policy comes to an end, you’ll need to take out a new one or you won’t be covered.
Whole Life Insurance
A whole life policy lasts from the day you take it out until the end of your life. Although this form of insurance is more expensive than a fixed-term policy, you’re protected for life and you receive a number of benefits. For example, because it has a cash value, you can draw out of it or borrow against the amount while you are still alive.
Is life insurance right for me?
Although life insurance is suitable for most people, you may decide that the product isn’t right for you. For example, a lot of people who are single and don’t have any dependants decide that they do not need life insurance. Similarly, if you’ve been with your employer for a long time, they may provide you with life insurance as a benefit.
However, life insurance is probably suitable for you if you get married, have a significant other or have dependants such as children. This way, you know a support structure is in place if something goes wrong.
After reading this guide, we hope you’re armed with all the information you need to decide whether a life insurance policy is right for your situation. Choosing a life insurance policy can be difficult, so consult with your friends and family if you’re still unsure.