Life insurance might not be a fun topic to talk about but having a policy can ensure that your loved ones won’t struggle financially after your death. However, taking out a policy isn’t as simple as just deciding that life insurance is a good idea. There are many options, not just in type of policy but company to use, so it’s important to make sure to consider carefully what you need the policy for and find one that best suits your circumstances. If not, your family might not get the benefit you were hoping for.
Here is some guidance on where to start with choosing the most appropriate policy for you.
Research the different types of policy
One of the most important steps is to educate yourself on life insurance. This will ensure that you can make an informed decision about what type of policy to take out. For example, do you want whole of life insurance that will pay out regardless of when you die, or a decreasing term life insurance policy that’s purely intended to cover your mortgage payments? Spend some time reading about all the different options that are available and consider how well they suit your family situation. If you do, you’ll find the process of picking a plan much more straightforward.
Be honest on your application
This part should go without saying, but it’s vital that you don’t lie on your application forms or withhold information from the insurance company. You might think this is a way to get a cheaper deal – for example if you have an existing medical condition and don’t mention it – but in reality, it could invalidate your policy and prevent your loved ones from receiving the payout. Those who have dangerous occupations or existing medical conditions can go through a specialist life insurance broker to find a policy that you’re not only eligible for, but also provides good cover and is affordable.
Ensure your policy meets your needs
The specific type of policy that’s best for you will depend on the details of your financial situation and family life. As an example, you might require more cover if you have a large mortgage to pay off, several dependent children, or a partner who has a much lower level of income than you. It’s crucial to choose a policy that meets your unique needs – not just the cheapest one or the one that your friend opted for. Similarly, you don’t want to be overpaying for cover that you don’t require.
Review your policy regularly
Lastly, it’s important to note that circumstances change. You might get married or divorced, have another child, buy a new house or finish paying off your mortgage. Whenever you experience a significant life event, it’s worth double-checking the details of your life insurance policy to make sure that it’s still adequate for your needs. You can always increase or decrease your level of cover as appropriate to suit your situation when it changes. This might also include deciding to put your life insurance policy in trust to avoid it being subject to inheritance tax. Just remember to make sure that there’s no gap in your cover if you switch providers, just in case!