If you have children, or other dependents, it’s essential to take out life insurance so they’re looked after financially in your absence. Depending on what type of policy you take out, your life insurance payout can pay off your mortgage as well as bills and funeral costs, so the burden doesn’t fall on your loved ones.
So which policy should you go for? Here are some considerations to take into account:
Level-term versus decreasing cover
There are two main types of life insurance policies on the market: level-term insurance and decreasing cover insurance. A level-term insurance will run for a fixed amount of time, for example 10 or 25 years. Should you pass away after this policy ends, you won’t be covered. A decreasing cover insurance decreases the cover amount over time. For example, as your mortgage payments decrease so does your cover.
The policy you decide on will ultimately depend on your individual needs and circumstances. There are numerous online guides that will help explain the differences between policies and what your payout will cover. For example, some policies will pay off your mortgage whilst others will give you a lump sum. You can also opt for a joint policy with your partner, which can be cheaper. Discuss the options with your family and compare policies online in order to decide which one is right for you.
When to take out life insurance
There’s never a bad time to take out life insurance, but there are certain times in your life when it may be more essential, such as when taking out a mortgage or loan or having a child. However, you may find you get the best deal by taking out a policy when you’re fit, young and healthy as opposed to later on in life, when premiums can increase.
Know what’s included
You should always read through a policy carefully before taking out life insurance to ensure you know exactly what it covers and if there are any exclusions and clauses. This will also give you the opportunity to include any add-ons such as cover for extreme sports.
Ultimately, when choosing your life insurance policy it’s best to do plenty of research to ensure you get the best price and cover that’s right for you.