Life cover is an insurance policy designed to provide money to your family if you die. You can either take out a policy which will provide a lump sum or a regular payment, called Family Income Benefit. Money can never replace the loss of a loved one, but in can make life easier and ensure that your family are not worrying about bills at an already challenging time.
When to buy life cover
Many people first consider taking out life cover when they get a mortgage, but other important times to consider life cover are on getting married and having children. As one gets older and takes on more responsibility this often means more financial commitments and more people depending on you.
Top Tip: Before taking out life cover it is important to check whether you have any life cover through your employment; many companies provide life cover (usually called “Death in Service” cover) for employees and it is often a multiple of salary. However as most people will change in employers several times across their careers and not all employers provide life cover, many people feel safer viewing this as additional cover and arranging personal cover separately so that they know that they their life cover will continue irrespective of whether they change jobs.
Can anyone get life insurance? How much will it cost?
Like most insurance policies when you take out life insurance you will pay a monthly insurance premium for the cover. The cost will depend on a range of factors:
- The type of cover you want (level where the value stays the same or increasing whether the cover goes up to keep pace with inflation.
- How much money the policy will pay out (e.g. £100,000 will cost less than £1M)
- How long the insurance will be in place (e.g. till you are 50,60, 70?)
- You age when you apply
- Your health
It is always cheaper to take out life cover when you are young and healthy. As we all know, unfortunately as one gets older you are more likely to experience health issues and this can make it much harder to obtain life cover. For example if you’ve had serious illnesses like cancer or a heart attack it can make it more difficult to take out life insurance. Our advisers will ask you about your medical history and use this information to research and recommend the most suitable insurance for you.
Different types of life cover
- Level term life insurance: Where the sum assured is the same for the whole of the policy term.
- Decreasing term life insurance: These types of policies are normally taken out to repay a mortgage and the amount of cover decreases over the term of the policy in line with the mortgage. These types of policies can also be used to cover inheritance tax on where gifts have been made and are known as “gift inter vivos” policies.
- Family income benefit: Instead of a lump sum, these types of policy pay out a regular income. These are very popular for families with parents often taking out a policy to pay a monthly amount, for example £3000 a month until the youngest child is 21. This helps give peace of mind that day to day family expenses can be covered.
- Whole of Life Insurance: These types of policies are designed to run for the whole of your life and are particularly useful for things like inheritance tax planning. Whole of life insurance policies are also known as life assurance and some also have an investment element which runs along side the insurance, meaning that this is an additional sum that will pay out on death, or if you surrender the policy earlier.
There are a lot of options and choices with life cover – Aspect 8’s experienced advisers will guide you through the different options and as Independent Financial Advisers shop around the whole of the market to get you the best rate. Call us today on 01273 229120.