What are the benefits of life insurance?
We can't predict the future - which makes it all the more important we're prepared for whatever life may throw at us.
Life insurance could help support your dependants in the event that the worst happens to you, giving you peace of mind that they'll be financially protected when you're gone.
What types of life insurance could I get?
There are several different types of life insurance (also known as 'life assurance'), depending on what you are looking for and the level of cover you want.
The three main options are:
- Level term cover
- Decreasing term life cover
- Critical illness cover
But what kind of financial protection does each type of insurance provide?
Level term cover
Taking out level term cover can insure you in a straightforward way. Basically, you'd make a fixed payment every month, which will then ensure your dependants receive a lump sum payout if you (the policy holder) die while the policy is still valid.
Level term cover allows you to decide on the length of the term and the amount you want to pay towards it every month. Of course, these decisions will affect the size of the lump sum your family receives.
Decreasing term life cover
Decreasing term life cover can also be called 'mortgage term insurance'. It is designed to give your dependants a payout that's specifically calculated to help them pay off your repayment mortgage in the event of your death.
Over time, as you make your mortgage repayments, the amount you owe on your mortgage will gradually decrease - so your family shouldn't need as much money to pay off the remaining mortgage. Because of this, the premiums - or monthly payments - can be lower than those on policies for level term cover.
Critical illness cover
Being diagnosed with a critical illness can 'come out of the blue' - and could have a big impact on your finances.
Taking out critical illness cover could provide financial protection if you're diagnosed with an illness covered by the terms of the policy. It could help you pay for any medical bills and care you require while you're ill, and/or help you compensate for any loss of income that may result from you not being able to work.
During an already difficult time, critical illness cover could take a huge weight off your shoulders.
What are the benefits of life insurance?
Life insurance could provide a range of benefits should the worst happen to you. As long as you meet the qualifying claim criteria, it can ensure that:
- Your mortgage is paid off
- Your family is financially protected
- You could still cover the cost of school/university fees
- You could still afford childcare costs.
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Tags: insurance, life insurance, benefits, life assurance, mortgage repayment