If the last 18 months has taught us anything, you need to be prepared for all eventualities and financial planning is a must, as the pandemic has caused a major shift in the financial structure of many households across the country, including ours.
Now that life is beginning to return to some sort of normality, doing a money makeover is important to get things back on track and one of the best ways of putting some of that extra money aside.
Firstly, compare those bills, check your direct debits and get rid of anything you don’t watch / use anymore for an easy win.
With health being at the forefront of many people’s lives, whether you have personally been affected by COVID19 or not, so now is the time to look at family life insurance.
Family life insurance is an insurance policy you can take out to help make sure your family receives financial support if you pass away, not when you lose an income due to illness or disability.
Your insurer will pay a lump sum to your family, which they can then use to clear a mortgage or a debt, or cover day-to-day expenses or specific obligations such as school fees.
How does family life insurance work?
With a family life insurance policy, you make monthly payments to an insurer. This protects your family in case anything happens to you during the duration of the policy – known as the ‘term’.
There are three main types of policy. Two have fixed terms, while the other is indefinite. It is important to shop around and get several life insurance quotes to compare them before you decide which is the best option for you and your family.
- Level-term life insurance: The sum insured is the same amount no matter when you pass away during the policy, provided it is still active and the repayments are still being made
- Decreasing-term life insurance: The pay-out decreases as the policy term goes on. This type of policy is designed to cover long-term financial commitments like mortgages, because as time goes on, your dependants will have less to pay off if you die
- Whole-of-life insurance: This type of policy covers your whole life and is guaranteed to pay out when you die. Whole-of-life insurance is more expensive than the other two types because there will always be a pay-out at the end
The life insurance cover amount you take out should be enough to cover what’s left to pay on your mortgage and you can then add extra financial cover for your family to help them cover household bills and day-to-day expenses and any other loans that you have taken out.
What information do you need to apply
A life insurance application will ask questions about your personal situation, including your finances, employment, health and medical history and hobbies. You’ll need to make sure your responses are accurate and honest to make sure your dependants would receive a payout if you pass away.
Life insurance applications take your current and past medical health into consideration, which affects what your life insurance premiums will be and may want to get a report from your GP, to assess the risk of offering you a life insurance policy.
Some insurers won’t ask to see your medical records when you apply, but it is important not to withhold any important information about pre-existing conditions, as they could refuse to pay out on a claim.
Do you have a life insurance policy?