It’s impossible to predict the future. Even if you feel that we’re at the peak of physical fitness and everything in life is going well, you just don’t know what’s round the corner, which is why life insurance (also known as ‘life assurance’) exists.
The main reason for someone to take out a life insurance policy is to ensure that even if the worst happens, their spouse and/or dependents will be financially supported when they’re no longer around.
What types of life insurance are available?
What kind of cover you take out will depend on what level of cover you require, and why you require it. The three primary options of cover are:
Level term cover
This cover option would see you making a fixed payment every month, which, in the event of your death, would ensure a lump-sum pay-out to your dependents.
This cover option lets you to decide on how much you pay and long you pay towards it on a monthly basis – obviously, the more you pay in, the bigger the lump sum, so it’s important to really think about how much you would want your partner/family to receive if the worst were to happen.
Critical illness cover
Being diagnosed with a critical illness often comes suddenly, without warning, and can leave you, your family, and your finances completely vulnerable – which is something neither you nor your loved ones need when you’re dealing with such a traumatic and troubling event.
Critical illness cover offers financial protection for those who are diagnosed with an illness that’s included in the cover as outlined by the policy.
This type of cover can also help you pay for any care you require or medical bills you’re lumped with as a result of being ill, and can also compensate you for any financial losses you might suffer as a result of being unable to work.
Decreasing term life cover
Also known as ‘mortgage term insurance’, decreasing term life cover will provide your dependants with a payout that’s calculated specifically to help them pay off your mortgage if the worst happens.
When you take out your policy, as time passes, you’ll continue to make your mortgage repayments, which will obviously cause the amount you owe on your mortgage to gradually decrease, meaning that the amount your dependents would owe on the mortgage would also decrease over time.
This then means that the premiums (monthly payments you would make) are often lower than those made towards level term cover.
So in summary…
Life insurance cover can benefit you and your dependents by:
- Ensuring your mortgage will be paid off;
- Ensuring you and your dependents financially protected;
- Covering the cost of school/university fees;
- Covering the cost of childcare.
For comprehensive and no-obligation advice on which life insurance cover would suit your situation best, visit lifeinsurance.org.uk.
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