Life insurance is one of the most important types of insurance you can have to protect your family
financially, so it is important to make sure you have a policy which provides your family with
sufficient cover, ensuring they are well looked after if you were to pass away.
Things to keep in mind when you are looking at life insurance:
- If you are new to life insurance, use a financial adviser rather than shopping online! An
adviser can make sure you are underwritten correctly and can help tailor your policy to best
suit you and your circumstances. - Revisit your policy regularly to make sure you are adequately covered; ideally annually or
after milestone events (such as a new job, birth of a child or taking out a mortgage). Many
insurers offer “Special Events Increases” as a built-in benefit with their life insurance
policies, allowing you to increase your sum assured after a significant event without the
need to be underwritten again. On the flip side, if you have paid off your mortgage or your
children have left home, you may be able to reduce your amount of life cover. Regular
reviews are an important step in ensuring you have the right amount of cover to protect
your family when they need it most. - Don’t change to another insurer just for cheaper premiums! If you already have life
insurance, make sure you seek out advice from an insurance adviser before deciding to
replace your current policy. When changing insurers, you risk losing any benefits with your
current policy and if you have developed any health issues since taking out your existing
policy, any new policy is likely to exclude those conditions from cover. - Premiums can be structured in different ways, which will affect the amount you pay over the
life of the policy! Stepped premiums are calculated on age and increase as you get older,
making them most affordable at the beginning of the policy but can become very expensive
later in life. Level premiums are calculated by averaging out the premiums over the life of
the policy, so the premium remains the same until a certain age (typically 65 or 70). While
this can make the premiums more expensive initially, level premiums can save you a lot of
money over the long term when compared to a stepped premium structure. - Make sure you have enough cover! Consider how your family would be impacted if you were
to pass away – not only are they grieving, but your family will also suddenly lose a significant
portion, or even all, of their household income, which may make it difficult to pay funeral
expenses or continue paying the bills. At a minimum, the amount of life cover should clear
any debts (such as credit card debt or personal loans), funeral expenses, lost income (ideally
1-2 years of your annual salary) and pay off your mortgage, which will allow your family time
to grieve and get their lives back on track without the financial worry.
There are lots of things to consider when taking out life insurance – the first step is to seek out independent financial advice to help decipher all the jargon and make sure you are suitably covered!
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