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Life insurance is a type of insurance policy that pays out if you pass away.
You make monthly payments in return for a lump sum which is paid out upon your death, or in some cases if you are diagnosed with a terminal illness.
It is your choice of what happens to the lump sum payment; you can select which beneficiaries to receive the funds.
There are three elements to consider when buying life insurance, which will start to determine your monthly payments.
The main reason people choose to get life insurance is to support their family financially in the event of their death. At what will be a stressful time, knowing that your family are financially taken care of will be comforting.
You can choose to cover the mortgage balance, care or educational needs, as well as considering extras such as holidays or home improvements for your family.
The answer is, it depends.
If you choose your spouse or civil partner to receive the payment, then no, however for other beneficiaries you nominate it may be subject to inheritance tax depending on the amount.
There are two basic types of life insurance for you to consider:
Decreasing term life insurance is where the amount you are covered for reduces over time over the term of the cover.
The idea is that as your mortgage borrowing decreases over time, and your children become financially independent, you will not need the same level of protection.
This type of life insurance has lower monthly payments.
With level term life insurance, you select a term which determines how long you will be covered for and your monthly premiums.
The difference is that the payout will be the same for the term, so you can expect to pay higher premiums.
With whole of life insurance, you are covered until you die, rather than a fixed term.
This type of life insurance comes with higher premiums and provides the most peace of mind.
If you have people who are dependent on you financially, such as children or a spouse, we would recommend considering life insurance.
Your dependents could be liable for your financial commitments after you die, including any debt, and they may not be able to maintain the same lifestyle in your absence.
With a life insurance payout, your family could be able to pay off the mortgage and live debt-free.
While there are triggers such as buying a house or becoming a parent for getting life insurance, the younger you are, the better when it comes to signing up to a policy.
Put simply, the older you are, the more likely you are to die and therefore, the more expensive your premiums.
You will pay less on your monthly premiums when you are young and healthy.
Many factors feed into the calculation to determine your monthly premiums, such as your age, medical history, whether you are a smoker and even dangerous hobbies.
Online calculations will give you an initial idea of monthly premiums, but the final amount will be bespoke to your circumstances.
Life insurance for the over 50's is more of a specialist product, and the majority are whole of life policies. There can be a limit to how much the policy will pay out as they are not always medically underwritten.
Our advisors can help you to find the right policy for you, get in touch today.
While it is not mandatory to take out life insurance when you sign up to a mortgage, it is recommended.
Even if you already have a policy, it is recommended that you revisit the policy periodically to check it is still meeting your needs.
If you have a change of circumstances, such as increasing mortgage borrowing or another child, you may be keen to amend the terms of the existing policy.
Our advisors can help you to check regularly that your policy is still aligned to your requirements.
Our team of experienced advisors can help you to get an insurance policy that is perfect for you. By working with an insurance expert, you ensure that your cover is precisely tailored to your needs while remaining cost-effective. Get in touch today to get started!
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.