Life Insurance - 7 Aspects to Take into Consideration

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1) Decide how much cover you need

This is the most difficult part. You come out with a figure and it looks like a lot of money. As well as taking your mortgage payments into account, you also need to consider other debts such as household expenses. You need to ensure you have enough cover to provide your family with a reasonable standard of living. Use a life insurance calculator online is my best advice.

2) Decide how long you want the cover for

Make sure that the term of your policy is enough to provide protection for your dependents. If you have a mortgage you don't want to leave the remaining debt outstanding to your loved ones so make a calculation of how many years are remaining on your mortgage. Also take in consideration other debts and household expenses. If you have any young children remember that you'll need to provide until they leave home i.e. until adult age.

3) Sometimes is better two single policies

Sometimes a joint policy is not the cheapest option apart from the fact that it only pays out when the first dies.
On the other hand, two single policies will pay out twice - when each of you dies - so in effect, you're getting double the protection. This is particularly important if you have children.

4) So many types of policies, choose the right one

There are so many types of cover. I know it is difficult to decide. The most usual is the Level term Life insurance. It pays out a lump sum if you die during the term of the policy.

There is also an increasing plan, that grown usually in line with inflation, (not always the cheapest option but with the benefit of keeping you from loosing against the inflation).

Decreasing life insurance also Known as mortgage life insurance decreases over time in line with your mortgage balance. This is normally the cheapest option.

Another form of term life insurance is called family income benefit which pays an income rather than a lump sum. Remember that is a term insurance meaning that it will only pay until the specified term of the policy.

Finally, you could opt for a combination. For example, you could get a level term assurance policy which is set at a level, say, £50,000 above your current mortgage debt, plus a Family Income Benefit policy. This will provide enough cover to your beneficiaries to allow them to pay off your mortgage, plus they would receive at least £50,000 as a lump sum, and they'd also receive your income every year for a set period, as well.

5) Shop around!

Make sure you shop around for the best quote. You can do this online, many websites have a life insurance comparison service.

Banks usually tempt clients with these type o financial products which rarely are the cheaper or the most suitable. Don't be afraid to say no.

You may have already a policy in place, it is recommended; still, to shop around for the best cover or a cheaper quote.

6) Set your policy up in trust

Putting your policy in trust means that the money will go for the person designates by you. If you don't do this, when you die, the amount paid out will form part of your estate and inheritance laws will apply.

7) Review your policy regularly
It is also recommended to review your policy every time your circumstances change, for example, if you have more children, remortgage or marry again.

And finally...

I you don't have children or a partner is very unlikely that you will need life insurance, you should consider instead a critical illness cover that pays out a lump sum in case you are diagnosed with a serious illness.

Thanks To : Ferret sub prime remortgage