After a certain point in life - usually after starting a family - people start wondering about scenarios where they are no longer around, and the question of ”what will happen to my family when I’m gone?” begins.
Life insurance is a solid and reliable way to safeguard those around us. Though sometimes it is used to cover the debt, funeral expenses, and even to pay off a mortgage, it is mainly used as a way to help a family after the death of the person who was financially supporting them.
Who can use life insurance
Basically, if you’re single and have no kids, and your debt is fairly manageable, then you probably don’t need it. If you have a family and sometimes you find yourself struggling to deal with debt and family expenses, then maybe you should start looking at life insurance options, for when something inevitable happens.
Do employers offer life insurance?
Some employers offer life insurance plans to their employees. It can be of great help during difficult times, but you need to also consider what can make that aid insufficient. For instance, if you have a mortgage or if you wish to leave more money to your family, then extra cover may be required.
What types of life insurances are available?
The most common one is known as Term-Insurance and it means that the policy is only valid for a certain amount of time.
So if you take out a life insurance policy for 30 years, then your family are entitled to it if you die at some point during that period of time. These policies will have the same payout regardless if you die within the first year or in the 29th.
Another form of life insurance is known as Whole-of-Life and it means that it will pay out no matter if you die 30, 8 or 50 years after. Both types can be accessed as single or joint, meaning that you can take out life insurance along with your partner.
Keep in mind that whole-of-life insurances are usually more expensive than term-insurance ones.
How much life insurance is good insurance?
This depends entirely on your own circumstances. Life insurance for a couple with four kids and a big mortgage is not the same as life insurance for a couple with one baby and a small apartment.
Experts recommend looking for life insurance that is worth ten times your annual income. Keep this as a reference point when you start your calculations to determine how much life insurance you need. Remember that the internet offers several life insurance estimators so you can have a little guidance there.
What factors affect you qualifying for good life insurance?
It depends on the type of policy, on the insurance company rules, the amount of money insured and obviously how “risky” you are to the eyes of the insurance company. This means that if you have a dangerous job, it will have an impact on the type of insurance you are eligible for.
Age is also a determining factor, life insurance costs are directly proportional to age. The older you are, the more expensive life insurance will be. Your health habits and duration of policy are also very important factors and can play a big role in the type of insurance you can get.
Some people opt for joint life insurance as it’s usually cheaper, just remember that joint life insurance rules dictate that it can only be paid once - after the first death - which means that the surviving partner will have no life insurance afterwards.
If you think that life insurance is the right move for you, it probably means that you are sometimes struggling with debt which is why we strongly recommend boosting your finances so you can pay off debt faster and before thinking about life insurance.
A good way to boost finances is searching for unclaimed PPI. Remember that at some point almost everybody was charged with mis-sold PPI policies, which banks are currently returning to their customers.
This means that you can have the money you unnecessarily paid on those policies for years and be claimed as tax-free money to clear a debt.
