Life Insurance Tips
Listed below are a few practical issues and pointers you should think about when considering taking out life insurance
When you are busy working, running a family and generally getting on woth life, it can be all too easy to let life insurance slip to the back of your mind.
After all there are so many financial consideration and obligations these days that giving priority to something that you hope that you may not even need doesn’t always come easily to people.
Thinking about life insurance is just one of those things that people tend to put off, it doesn’t help that the whole idea can seem rather morbid to people – nobody wants to contemplate a event in which life insurance would be needed, but if you’ve got loved ones who are dependent on you financially and you haven’t already got life insurance (or even if you have got life cover but have had it for a long while) then perhaps now is the time to think about it.
So, what should you consider ?
1. One of the most important thinds to remember is that as with any financial product that you buy, searching the market for the best deal is likely to prove well worth your while. This should be easy to do when using a broker as they will search the life insurance marketplace for you and provide you with details of the best deals and advice.
2. Remember that the best life insurance is not just about premiums though, you need to be sure you’re getting enough cover for your needs. Consider everything, it may be that the majority of the cover would go towards paying off the mortgage but don’t forget about all the other little (or not so little) costs that your dependents would have to face, funeral expenses (could be a couple of thousand pounds at least); paying off loans; buying a car to replace a company car for example.
3. You’ll need to decide how long your policy is going to cover. This could mean that you want last until you think your children will have left home, or maybe when you’re due to retire, or even when the mortgage is paid off.
4. If your circumstances change it’s the time to consider reviewing your policy. If you’ve already got a life insurance policy it’s easy to forget that as your situation changes (buying a new home or having more children for instance) your level of cover should probably change to match your needs, maybe increasing (or even decreasing) the amount of life cover that you need.
If you’ve had a life insurance policy for a while it can also be worth checking every so often to see if you could get a better deal by changing to a new policy. Having said this, you should take care - don’t just consider the size of the monthly premiums, you could end up losing valuable benefits (such as waiver of premiums or cover for some critcal illnesses) by switching to a cheaper deal and you need to consider this before stopping a policy and starting a new one.
5. To be certain that the money from your policy actually goes to the people you intend it to you should ensure that it’s written in trust. The benefits of doing this are not always appreciated when taking out a new life insurance policy, but by setting up your policy in trust (this is often simply a case of filling in the trust form that comes with your application) you’ll be making sure that the proceeds of your policy aren’t included in your legal estate. This not only means that your pay out will definitely go to your named beneficiaries; it will also ensure that it isn’t subject to inheritance tax (and therefore your dependents will get the full amount) and is disregarded for some other benefits as well.
Please note that the above information is for general guidance only.You should neither act, nor refrain from acting, on the basis of the information. You should always take appropriate professional advice by talking to a broker or your IFA for advice that is based on your particular circumstances.