Choose the Right Life Insurance

When you buy life insurance, it’s vital to make sure you choose the right life insurance policy for you. Life Insurance gives you a range of choices, when it comes to the length of the policy, and also the way in which the policy pays out. You need to make sure you pick the right policy for both you and your family, as if the worst were to happen, the decision you make now could have a huge impact on your families ability to deal with their finances and grief.

Life insurance is sold to customers to provide their families with a lump sum payment in the event of the unfortunate event of the customer, and is either sold as term life insurance, covering a customer over a certain term, or as whole life insurance, covering a customer for their whole life.

Whilst whole life insurance might sound a more attractive proposition, it certainly costs more, with most policies costing around eight times that of term life insurance.

Whilst whole life insurance does guarantee a return on investment, many people realise that their income will be less important by the time their term life insurance has run out, and that actually being protected then can be a waste of money.

Term life insurance on the other hand is a lot cheaper, which is one of the main reasons it’s the most popular form of life insurance sold in the UK.

One of the biggest benefits of term life insurance is that it covers a customer during their period of greatest financial responsibility. Most people have a term life insurance policy for the duration of their mortgage, and whilst their children are still living at home, relying on their income.

Once the mortgage is paid off, and the children have left home and become financially independent, many people don’t actually need a life insurance payout to survive.

Your other decision revolves around the way a life insurance policy pays out. The most traditional policies are for a flat rate, and pay out the same if a customer died two weeks into their policy as it would if that same customer died two weeks before the end of their policy.

Reducing term life insurance reduces the amount the policy pays out, as time goes on, and in line with the amount of mortgage a customer has paid off, and is cheaper than flat rate life insurance.

You can also consider a policy which pays the money on a monthly basis, rather than as one huge lump sum.

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