What Type Of Life Insurance Is Right For You?

No one likes to consider their own mortality or think about what might happen to those they might leave behind, but life being the unpredictable thing that it is, it’s an important set of plans to implement sooner rather than later.

There are plenty of ways of setting aside money for your spouse and children for the future but the advantage of life insurance is that it is probably the most cost effective. The most common policy is probably the level term life insurance: one that pays out a fixed amount if the policy holder dies within a given period. Another common policy is critical illness cover, where insurers will pay out if you are diagnosed with a specified and potentially terminal illness. The cover is designed normally as an add-on to a life insurance policy, not as a substitute, or it may be set up as a stand-alone policy. The funds can pay for treatment or end of life care, or they can be used to reduce or clear other daily costs that you would normally pay for if you were well and earning a living. These policies could pay off your mortgage in the event of your death and offer separate policy options to pay the mortgage if you become critically ill.

An employee might be eligible to pass on to your dependents a ‘death in service’ payment. Some employers offer payments for employees who die whilst they are with the company.

The impact on your current earnings should be weighed up against the possible payout for your family; there is no sense in impoverishing yourself while you are alive for a hypothetical payout in the future. As a rule of thumb the lump sum you should be expecting your family to receive should be approximately ten times your annual income.

One way to bring down the cost of your insurance is to give up as many bad habits as possible before you take a policy out, the main one being smoking (this will yield many additional benefits beyond cheaper insurance too), drinking, or participating in hazardous sports.