It’s common to put off buying life insurance as it means facing our mortality. However, it helps to imagine how your family would manage without you. If you have children, life insurance is especially important. Trying to choose the life insurance that’s right for you can be a minefield and a very time consuming exercise. Here are ten things that you need to know before you buy.
1. Putting off Buying Life Insurance can Cost you More The younger and the healthier you are, the cheaper your insurance payments will be – so do it now. Even if you’re not young and healthy you still need to act now. If you smoke or you have a known medical condition you will have to pay more but you can still get cover.
2. Not Earning? You still need Life Insurance.
If you’re feeling unappreciated as a stay at home Mother, you might be interested to know that Legal and General have worked out that if you were paid for the work you do, your annual earnings would be £30,032.
If something were to happen to you, your partner would have to find that kind of money just for looking after your children. Life Insurance can give you peace of mind.
3. Scared of Meeting with an Adviser?
This is another common reason for putting off the purchase of life insurance. It’s true that you can buy through a specialist broker or a financial adviser – but you don’t have to. If the thought of that brings you out in a cold sweat you might like to know that you can buy life insurance online. Just take some time to read the terms and conditions and understand what the policy covers before buying.
If you’re still scared you can talk to an impartial qualified adviser from MoneySupermarket. Call them free on 0800 142 2023.
4. Find out what you Already Have
Don’t buy until you’ve checked out any benefits that you may already be getting from your employer. This could include Death in Service cover. This can save you from buying an insurance policy that has more cover than you need.
5. The Most Basic and Cheapest Life Insurance
Term assurance, also called Term life insurance will cover you for a fixed length of time. This is often the time left on your mortgage or until your children come of age. This sort of policy will pay one single lump sum if you die while still paying the policy.
6. Do you want Longer than a Fixed Term?
If you would rather buy cover for your entire life, then you can choose a ‘whole of life’ policy. These can be more expensive so to make it affordable you may need to reduce how much cover you buy.
It’s worth knowing that if you are already paying into a whole of life policy, you may have reason to get some cash back. If you didn’t have the policy properly explained to you or you have one which doesn’t cover you mortgage it’s worth checking if you can claim the policy was mis sold to you.
7. The Benefits of a Fixed Premium
This means choosing a life insurance policy which guarantees that the monthly payments will stay the same. You could choose a policy which has guaranteed fixed payments for the first 5 or 10 years but be aware that after that your insurer will take another look at what you’re paying and that cost may increase.
8. Choose Cover that goes down Along with your Debt
This policy is called decreasing term assurance. It mean that the amount of money paid out to your family if you die will be that same amount that is left to pay on your mortgage. This can bring peace of mind regarding your family’s security.
9. Cover that doesn’t Fluctuate
An alternative to decreasing term assurance is level term assurance. This is not linked to your mortgage. However, you will pay more for this type of policy as your family would receive a fixed payment even if you have almost paid off your mortgage.
10. How do I Cope if I’m Ill?
Insurance doesn’t just have to pay out when you die. If you suffer from a heart attack, cancer or a major illness which prevents you from working, having critical illness insurance can pay your bills util you’re back on your feet.
If you’re ready to buy life insurance you will need to know your National Insurance number. The government used to issue ni cards so if you can find yours, great!
If you don’t have a card, you can find your NI number on a payslip or any tax documents you may have.
If you still can’t find it, you can download a Form CA5403 fill it in and your NI number will be posted to you.
If you need more help with this, call the National Insurance Registrations Helpline on Tel 0845 915 7006
We hope that these facts have helped you to understand life insurance policies and got rid of some of your fears.
Go and buy one and the relief will be incredible – we promise!