Know your financial situation
Life Insurance payments are monthly and occur for the lifetime of the policy. This can be a big financial undertaking unless you are prepared. Our advisors will also not sell you a policy if we deem it to be unaffordable.
Please spend some time looking at your income and expenditure on a monthly basis, identify how much you can afford and whether it is affordable in the future.
How much insurance do you and your family need?
Do you know how much money your family will need to live at the level they are at now if you were to die? It may not be as simple as it sounds to calculate.
Spend time working out what you would want your children and family to have paid for (schooling, trips, mortgage deposit) as well as living costs for an extended period of time. Also note how much you have left on your mortgage payment as you can ensure you have a decreasing term policy to make sure your family owns the house outright.
Understanding level term versus decreasing term insurance
Level term insurance means that the policy payout remains the same through the lifetime of the policy. Decreasing term insurance has a decreasing payout amount through the lifetime of the policy.
You can find out more by reading these articles on Level Term Insurance and Decreasing Term Insurance.
Understand what affects the cost of your policy
With life insurance being paid out upon your death, it is safe for you to assume that anything that may lead to your early driving up the price of your policy. There are the obvious ones such as smoking or having a very high BMI but there are also ones you haven’t thought of such as a history of family illness, your line of work or even your hobbies.
Be truthful on the application
Your insurance policy is only as concrete as the answers you provide. If you lie on your application your family will not receive the payout upon your death so you will have wasted your money paying the premium.
Whilst it may be appealing to try and make the premium cheaper it is not worth it.
Be ready to spend some time on the application
Working through the application can take 20 to 30 minutes. Make sure you clear some time in your diary to go through the application in detail, this way you ensure you get the cover you need; you answer the questions as correctly as you can and your family is fully protected.
What is critical illness insurance?
A secondary policy that you may want to look into is critical illness cover (CIC). Critical illness cover is designed to provide financial protection upon diagnosis of a specific illness, medical condition or disability specified within the policy. In the event of a claim, a critical illness insurance policy will provide a tax-free lump sum (defined at the outset) to the policyholder who can then use these funds as they wish.
What is income protection insurance?
A third policy is Income Protection (IP). Income Protection is an insurance policy designed to pay out a regular income if you are unable to work due to an accident, sickness or unemployment. The pay-out can make sure you are still able to meet your essential household costs. For example, your mortgage/rent, utilities and ensure you can put food on the table until you are able to return to work.
