The only life insurance checklist you’ll need
Don’t have life insurance? One of the reasons that many people hesitate to purchase life insurance is because it can seem complicated and they are worried that they’ll make the wrong choice.
Bearing that in mind, we’ve put together a really simple checklist which will help you think about exactly what you need, and to prepare you for purchasing the right life insurance policy for you.
What do you want your life insurance for?
☑ To cover my funeral expenses so my family don’t have to
☑ An outstanding mortgage – I don’t want my family to be saddled with the debt after I’m gone.
☑ I want to make sure my children are provided for if I’m no longer around.
The answer to the above may impact on the amount your insure yourself for. If you’re just covering funeral expenses, then a small life insurance policy for a few thousand pounds may be adequate.
For your mortgage, you’ll want a policy that covers the value of the outstanding debt of your home.
For those of you who have a young family and want to provide for them after you’re gone, you’ll want to make sure your policy is enough to cover any outstanding debt plus extra on top to future-proof their financial needs.
Who will be covered by the life insurance policy?
☑ Just me
☑ Myself and my partner
As well as single life insurance policies, joint policies are also available if you are married or living with a partner. Many people think it will be more cost-effective to have one policy that covers two people, however it does often come with limitations.
Often a joint policy will only payout after the first death, the surviving partner would need to take out another policy if they still wish to be covered. Two separate policies may be more sensible, particularly if there are children that would benefit from two individual payouts.
How long would you like the policy for?
☑ I want the policy to run alongside my mortgage, until it is completely paid off.
☑ I want a whole-of-life policy, so a payout is guaranteed, no matter how old I am when I die.
The most popular form of life insurance – and generally the most affordable – is term insurance. This is a limited time insurance policy which usually lasts for the same amount of time as your mortgage term. Should you die within this period, a claim can be made. If you survive the term, then the policy becomes null and void.
To guarantee a payout, then you’ll need what is known as a whole-of-life insurance policy. These are typically for smaller amounts, and your premiums may be more expensive, however it does mean that even if you live to be over 100, then your beneficiaries will receive a payout after your death.
What do I need for the application?
The life insurance provider or agent will ask you a number of questions. These will include:
☑ Health problems
☑ Lifestyle/habits e.g. smoking, drinking etc.
The above factors will all be taken into consideration when calculating your premium. If you’re deemed to be a low-risk (young, non-smoker, no pre-existing health problems) then you’ll typically pay less for your premium.
It is important to be completely honest with your responses to the provider. If you’re found to have misled the insurance company about your health or habits, then this could be seen as fraudulent and your policy may be cancelled/no payouts will be made.
SoSmart Protect is committed to helping you find the best value life insurance policy for your circumstances – why not speak to one of our specialists today?
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Protect.