How long do I need life insurance for?
If you have a young family or plan to have more children, you may want to put life insurance in place at least until your youngest child has left school or finished college. This could mean having life insurance for a term of at least 20 to 25 years. If your children are older, five or 10 years of insurance may be enough. Some policies, such as whole-of-life policies give you insurance for your lifetime so you do not have to decide on a specific length of time (the ‘term’ of the policy).
Who should I insure?
If you are in a relationship and have dependent children, it is important to consider what may happen if either you or your partner died. For example, if you are involved in looking after your home and children, there could be extra childminding or housekeeping costs if you died. So, you may want to consider taking a policy for both partners.
Who gets the benefit from life insurance?
If you arrange a policy on your own life, the policy benefit is usually paid direct to your estate, or to whoever you have named as the beneficiary, once the insurer receives proof of your death.
If your husband, wife or partner takes out a policy on your life, the policy benefit could be paid direct to them without going through your estate.
If you have a mortgage protection policy, it has to be ‘assigned to’ your lender. This means that as long as you have a mortgage, the policy benefit will be paid to your lender if you die. They will use the money to clear your mortgage and pay any money left over to your estate.
How to Shop for Life Insurance Products
Life insurance is a long-term policy. This is different to home or motor insurance where your policy ends each year unless you renew it. So, it is even more important to consider your needs carefully and to shop around for insurance that meets those needs and gives you long-term value for money.
You can shop around for life insurance over the phone or on-line by using one of the premium calculators on insurance companies’ or brokers’ websites. Or, you can use an insurance advisor who will help you work out your needs and shop around on your behalf.
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