What is the life insurance process?
Taking out life insurance can be a great safeguard for your family's future. Losing a loved one can be hard enough without having a mortgage and other money worries to deal with. Your life insurance could provide them with a lump sum upon your death which could help them cope with their finances.
Deciding you want life insurance is only the first step, however. Many people are daunted by the whole process, perhaps because they don't understand it fully. Here are some of the steps that you may encounter in an average application:
Work out how much your family would need
It can help to know exactly how much your family would need if you died within the timeframe of your policy. There are many things you may need to take into account, such as how much your family would need to pay your mortgage, outstanding debts, tuition fees, childcare, etc. You may also wish to leave a lump sum for your children, for example, to contribute towards a deposit on a house. Knowing how much you will need can make comparing prices much easier.
Decide on your beneficiary
Who will your money go to? You can choose anyone to be your beneficiary. Common choices include children, grandchildren, spouses and partners. Make sure that you review these regularly and change them where appropriate (for example, if you change your partner or have any more children).
Research different types of life insurance
Find out what kinds of life insurance are out there. Reading articles about types of life insurance could give you a starting point.
Get quotes
Collect a number of quotes from different companies and compare them. You can gather these by ringing different companies, or by filling out a form on a price comparison website. The cost of life insurance can vary a lot depending on your insurer and policy, so be sure to shop around.
Understand the terms and conditions
Once you have found your ideal policy, make sure you read the fine print. This will ensure that you know exactly what you are, or are not covered against.
The application
You can apply in a variety of ways, most commonly on the phone or online. Applications can sometimes be lengthy, so make sure you are not in a rush. You will also need your personal details to hand, such as your date of birth, height, weight and work details. You may also need to answer some health questions, like whether you are a smoker and how many units of alcohol you consume per week on average.
Health examination
Some insurers may require you to complete a health examination before insuring you.
Optional extras
You may wish to add some extras to your policy, such as critical illness cover. This is entirely up to you and your individual needs, however.
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