About Life Insurance

About Life Insurance

It is not a pleasant topic to think about as none of us want to think about dying, which is why alot of us tend to delay or put off getting a life insurance policy. The bottom line is that all of us die and sometimes we do not live to a ripe old age. This means that if you have a family who depends on you, you want to ensure they are taken care of in the event of this happening.

It is really important to understand the different types of life insurance on the market. This will determine what type of policy you take out and how your family will be taken care of financially.

Do your figures first!

Before taking out a policy you can calculate how much cover you really need quite simply. First account for all your outgoings such as a mortgage and family education as well as additional things you would want to pay for in the future e.g. a child’s university degree. Next deduct your current protection and policies from this total, including any support that may be received from your current job. This should provide a total of the costs that you will need a policy to cover.

What type of life insurance policy should you buy?

Life insurance policies are personal so it is important to think about whom you are leaving the money to; some people will be able to cope with a lump-sum but others may be better suited to receiving pay-out in instalments through income policies. The majority of people have two main requirements that they would need to be covered by a life insurance policy. They are as follows:

Debts - Payment of any large debts like a mortgage, car or boat. You do not want to leave your loved ones saddled with massive amounts of debt that are not payable with their income.

Living Expenses - Leaving money for your loved ones to take care of their living expenses is also very important. Otherwise known as "Family protection" you will want to ensure that your family have enough money to live on after you have died.

There are two different types of life insurance that good to cover you for these different protection needs. They are Term assurance and Whole-of-life policies and they have different terms and parts to their policy, more of which is detailed in our "Types of Life Insurance" section.

Joint or single life policies

If you’re married or living with a partner it may be more cost effective to take out a joint life insurance policy that will pay-out on the first death; this is good for couples with shared finances who would not be able to support themselves financially should one of them pass away.