Life insurance, or life ‘assurance’ as some people call it, is a very important element when considering the financial future of your loved ones when you’re gone. The type of policy you can get, or the amount of life insurance that you need, really depends on your individual circumstances, like whether or not you have a mortgage, debts, grandchildren, or other financial ties that you want to look after.
When comparing life insurance quotes, you will need to make sure you have calculated exactly how much you need, whether you’re going to cash it in later on in life –retirement purposes, for example – or you wish to pass on the sum to your elected beneficiary. Furthermore, the acceptance of your policy will also depend on your mental and physical state, as well as unforeseen medical issues, like genetic illnesses, etc.
One of the biggest considerations about life insurance, assuming that you’ve found the right policy, is whether or not you can afford the premiums. Premiums are the payments you make to your insurers, weekly, monthly, annually or yearly (yearly usually offers the best discounts), that will allow you to receive your cash sum when you die. The more benefits you have on your life insurance policy, the higher the premiums will be.
Covering Your Mortgage
As there is no ‘one size fits all’ life insurance policy, you’re going to have to prioritise the financial elements that you want your policy to take care of. Again, this will vary from individual to individual, but there are a few financial responsibilities that nearly all people are tied to – like a mortgage for example.
Mortgage repayments will certainly be the biggest debt most people will leave behind if they suddenly die, and if you’re the main breadwinner in the family, the last thing you’d want is for that debt to be passed on to your loved ones. Making necessary provisions for circumstances like these is where life insurance comes in. Some mortgage lenders actually require you to buy life insurance with your mortgage, to cover the cost in the event that you die.
If you already have life insurance, now is the time to check whether it will cover the cost of your outgoings. Over the last few years, mainly due to the global recession, many life insurance policy premiums have gone up, but if you’re not getting a bigger pay-out for this premium increase, then maybe it’s time to consider another policy.
Children, grandchildren and great grandchildren are also an important consideration when choosing a life insurance plan. Everyone wants to leave something to their young loved ones when they die, so you’re going to want the policy with the biggest pay out, whether it’s when you die, or when you cash it in.
As a parent or grandparent, totalling up the ‘unpaid’ expenses that you have to fork out for is vital when comparing life insurance policies. Furthermore, childcare, college funding and other financial elements of raising young family members must also be considered.