Life Insurance: Do You Really Need It?
By Andrew

These days, it seems there are policies available for just about everything: car insurance, home insurance, travel insurance, pet insurance, life - the list appears to be endless. Some types of insurance, such as car insurance, are required by law if you intend to drive on the public highway, but for most people other forms of are an optional extra.

However, it’s important to note that arranging policies for other lifestyle items can provide you with peace of mind should something unfortunate happen. For example, taking out home-contents can help cover the cost of replacing your household goods, while pet can cover the cost of veterinary bills and treatments. But perhaps one of the most important ‘optional’ insurances you should consider is life insurance.

Whilst no one likes to think about death, life - sometimes known as life assurance or term assurance – is a policy which pays a lump sum in the event of the policyholder’s death, helping to protect loved ones and dependents against financial burden. Coming to terms with the loss of a loved one is never an easy thing to do, and the added financial burden can make it increasingly difficult to cope. However, a life policy can help cover such costs as mortgage repayments, salary replacement and childcare costs, paying off debts or even providing for future education for the kids. Moreover it can help ensure your family can maintain the standard of living to which they were accustomed to.

Life comes in various forms, the most common being level term, decreasing term, critical illness and family income benefit policies. Most are available as both single and joint life policies, with most policies including benefits such as paying out on the diagnosis of a terminal illness. If you’re considering life now, or in the future, it’s important to understand what each type of policy provides.

- Level term is the most common form of life and is designed to pay out a lump sum of money in the event of the policyholder’s death. The policy runs for a fixed term, normally a minimum of 10 years, and the sum assured is guaranteed, and remains unchanged throughout the life of the policy.

- Decreasing term life is also known as mortgage protection cover and is regularly used to protect capital and interest payments on a mortgage. The sum assured decreases during the duration of the policy.

- Critical Illness pays a lump sum if you are diagnosed with a specified illness, or suffer loss of limb and can be added to term policies. The sum paid out by this policy can be used for any purpose.

- Family Income Benefit pays a regular tax free income for your dependants throughout the remainder of the policy term. Payouts on this type

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of life can be structured to correspond with changes in inflation, although benefits usually remain constant.

With the cost of life insurance premiums plummeting in recent years due to improved life expectancy and increased competition between policy providers, arranging a life policy needn’t mean breaking the bank or compromising on cover. Financial comparison sites can help you to find the best deals on life – from premium prices to levels of cover – and with only a few clicks, you can insure and safeguard your family’s future for when you’re no longer around.

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