Life Cover : What This Covers
Life Insurance cover could really be better described as "death insurance" - traditionally we all understand that this pays on one event - the death of the policy holder.
Policy holders select how much cover they need and for how long; a premium which can be paid monthly or annually is agreed and for as long as is being paid the cover is in place. In some cases the premium may be altered to reflect any additional risk from personal or known family health conditions or participation in adverse or risk related employment or hobbies.
The amount of cover requested usually reflects the position the policy holder wants to protect on their death; usually this is to facilitate a situation whereby all debts are cleared and an amount in addition to this is left over as a lump sum for dependents to live from. It is very important to protect this increasingly large amount from taxation by placing the policy provision "in trust" which can be arranged by some insurance companies at no extra cost.
The amount covered can reduce over the term if for example, the policyholder has a reducing mortgage balance, and dependents become less so as the years go on; thus making the premium more affordable and enabling higher cover when most needed reducing to less later in life - simply makes your budget work better for you.
A policy can be in joint names but will only pay on the first death; depending on budget good financial planning would be separate policies each paying out and giving much broader dependent protection.
Life Cover : Who Needs This The Most
Anyone with debts to cover if they die before repayment.
The second priority would then be provision for those dependent on policyholder income Some employers have death in service as part of their employee packages - the calculation of cover is entirely up to the personal circumstances of each individual; the important task is to decide, plan, budget and control what happens in the event of your death.
Having the foresight to provide for your estate but moreover genuinely protect your loved one's is as important as to deciding which Insurance provider to trust.