While no one wants to discuss the death of a loved one, having a life insurance policy put in place can help to protect your family and provide them with a lump sum in the event of your death.
And while there are plenty of places to help you compare life insurance policies, it’s essential that you understand what you need in your life insurance coverage before you do.
Reasons Why People May Look For A Life Insurance Policy
While there are several reasons why someone may want to look into taking out a life insurance policy, the most common reasons tend to revolve around wanting to make sure the people you love are safe and sound in the event of your death.
A life insurance policy can help to cover mortgage payments, university costs and fees, inheritance matters and even the expensive costs of putting together a funeral if the unexpected should happen.
How Do I Know Which Life Insurance Policy To Get?
This depends entirely on your specific circumstances, your overall goals, and what you hope to give your loved ones in the future. The size of your family, the size of your current mortgage, and even the number of people who depend on you financially can all play a vital part in helping you to find the right policy.
Of course, a person’s finances will also come into play here and are usually one of the main deciding factors in which policy someone chooses to take out.
The Different Types Of Life Insurance Coverage
Generally speaking, there are three main types of life insurance coverage – term life insurance, decreasing life insurance, and whole-of-life insurance.
Term life insurance allows the policyholder to set the times in which the policy is placed (usually until the youngest child of the policyholder turns 18). You’re even able to dictate the amounts paid out (although this amount will be set against the length of your policy).
Decreasing life insurance policies are usually more cost-effective, as the amount of money that gets paid out becomes less over time. However, this kind of policy still usually covers your mortgage.
Whole-of-life insurance lasts for the entirety of your life. This policy tends to have a more expensive premium than term life and decreasing life insurance policies.
The Benefits Of Having A Life Insurance Policy
Finding the perfect policy for your specific needs means understanding the benefits of obtaining a policy. Below are the 3 main benefits of taking out a life insurance policy:
- It gives your loved ones some financial support in the event of your death
- Life insurance funds can be protected from inheritance tax (if written in trust)
- It gives you peace of mind that your family will be looked after if you die
It’s also important to remember that you’ll pay a monthly premium for your policy and that your premium can rise depending on your health. To find the perfect policy for you and the future of your loved ones, it’s essential that you take all of these factors into consideration before making a final choice.