Life Insurance covers pays you in the event of your death. Most of us have liabilities such mortgages or loans and all of us have a responsibility to other members of our family such as spouses, partners, children and parents. The last thing you would want to do is leave them with your financial burdens and worse off due to your financial commitments that have not been paid off.
There are several types of like insurance and hence it is important to understand them. It is also important to decide which aspect of the insurance is most important for you. The most popular types of life insurance covers are level term assurance, decreasing term assurance, mortgage term assurance, renewable term assurance and family income benefit assurance.
Each type of life insurance works slightly differently and hence it is important to have your requirements clear before you invest into a life insurance policy. A quick overview on the various popular types of life insurances mentioned above is as follows.
Level term assurance: This type of life insurance pays out the amount insured when claimed at any time during the policy. Normally the policy premiums also remain same for the whole term. This is generally useful if you are on an interest only mortgage over a long period of time.
Decreasing term assurance: In this type of life insurance, the pay-out reduces year on year at a flat fixed fee. The policy premiums should also go on relatively. This is ideal if you have a re-payment mortgage.
Mortgage term assurance: In some instances the decreasing term assurance may not satisfy the requirements as you may want to vary your mortgage payments every year and in such instances, the mortgage term assurance comes handy as the amount covered under this policy decreases in line with your mortgages.
Renewable term assurance: Renewable term assurance is mostly used by employers as part of the benefits to their senior management. These policies are renewed often depending on the number of people and also the benefits agreed with them. As they are for fixed short term, they tend to be cheaper as well.
Family income benefit assurance: This type of life insurance is attractive if you do not want a lump sum to be paid out in the event of your death but a regular amount of tax free income until end of the term of the insurance. This is ideal for young families as the family of the policy holder will receive a fixed monthly income every month until end of the insurance.
It is advisable to speak to an advisor and compare quotes. Normally life insurance is a more complex decision as there are several variables to consider.
Life insurance can make a big difference to your family if you happen to encounter untimely death. You have a choice of how to leave your financial situation. If you want to ensure that your family do not have to carry the burden of your financial commitments and decisions, then it is prudent to take out some form of life insurance. Most types of life insurance also helps you to put your mind at rest that you have been as responsible as possible and if the unfortunate were to happen, you have done all you could have possibly done to look after your family even when you are not around. Life insurance is not something that one thinks naturally but unfortunately one has to plan for all eventualities and if you have financial commitments such as mortgages or loans then the last thing you may want is to leave it uncovered and your family to suffer when you are not around.
The most common anxiety for many people is how their family will cope when they die. This is true especially if the person is the main bread winner and other people in the family are dependent on this person. However regardless of dependency, many people care for their loved ones and do not want to leave them financially worse off. Most people tend to save and work hard to ensure that their families and children are better off than themselves but unfortunately if they die prematurely with a big mortgage or loan, they will be leaving their families with a financial burden that can be challenging to fulfil. Life insurance provides a good solution as the cover will ensure that all financial commitments are paid off and the family is not burdened. This ensures that in the event of death, the family is not burdened with expensive financial commitments. There is a wide range of life insurance that is available to choose from.
If you don't have a life insurance and have big financial commitments, it is prudent to consider investing in a life insurance policy. However if you have one and if you have incepted a few years back, chances are that you might not remember how much you are paying and what you are exactly covered for as these are complex products. If this is the case, then it is time to review your policy and get some advice or comparative quotes to benchmark.
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