Having peace of mind that your loved ones would be OK financially in the unfortunate case of your death is important. Life insurance can provide you and your family with the safety net of being able to stay in your home and pay for the things you planned to do together, long-term.
At Oakworth we have years of experience and knowledge to give life insurance advice. We can work with you to decide on the best life insurance for you and your loved ones based on your current financial situation, circumstances and income.
What is life insurance?
Life insurance, or life cover, is a type of insurance policy that helps to protect your loved ones financially, upon your death. Life cover can’t replace you, but it can help to minimise the financial impact, after your death, on your loved ones that are reliant on your income and financial support.
Life insurance is there to give your family peace of mind, through a difficult time, taking away the additional stresses of everyday costs such as mortgage payments, household bills or childcare costs.
Most life insurance policies are designed to pay out a lump sum to your beneficiaries after your death, but some will allow you to set it up, so it comes in as regular payments. Generally, the amount of money paid out depends on the level of cover you opt for. Other considerations are:
- How long you need to be covered for.
- Whether it will cover specific payments such as mortgages.
- Whether you need joint or single life insurance policies.
What are the different types of life insurance?
There are two main types of life insurance and cover.
Term life insurance
Term life insurance is usually the most popular type of life insurance, and slightly more affordable. Term life insurance runs over a fixed period of time (term), and only provides coverage during that certain amount of time. Typical policy lengths are 15, 20 and 30 years. This type of life cover only pays out if you die within the policy length, there is no lump sum / surrender value which pays out at the end of the policy.
Whole life insurance
A whole life insurance policy provides lifelong cover meaning that it will pay out no matter when you die, as long as you have kept up with your payments.
Within both types of life insurance policies, there are variants of both. Get in touch with us to discuss in more detail the types of policies and for life insurance advice.
What does life insurance cover, or not cover?
In general, life insurance usually only covers death. Most life insurance policies have strict lists of exclusions, which are things they don’t cover. For example, most life insurances won’t cover if you can’t provide for your family due to illnesses or disabilities. They also might not cover you if your death is alcohol or drug misuse related, similarly if you take part in dangerous sports this could also be an exclusion.
If you have a critical illness when you take out the policy, your life insurance may exclude any death that was related to that illness. There are other insurance policies which are specifically designed for if you are diagnosed with a terminal illness.
Do you need life insurance?
To decide if you need life insurance, it is important to fully assess your individual situation. It is highly recommended that if you live with, or support anyone else financially, you look to obtain life insurance. Ultimately, it is about assessing if your family members could manage financially if you were no longer around.
One of the most obvious reasons to get life insurance is if you have a child/children. This isn’t the only reason to get life insurance, if you have a partner or a family member that you live with and share mortgage or bill payments with, you should also consider getting life insurance. In particular, if that person would struggle to pay for the mortgage if you were to die.
To assess this, you will need to look at how much money you currently need and how much your family pay for day-to-day living expenses, childcare and bill payments. If your children no longer live at home and are no longer reliant on you financially, life insurance may not be as much of a priority of those with younger families or new homeowners. However, life insurance is an important consideration for people with any financial responsibility.
Our expert life insurance advice can help you establish the best life insurance that ensures protection for you and your family, in the case of your death. We’ll look at your unique circumstances and situation and work out what you need to do this.
Get in touch today to arrange a consultation with one of our friendly and knowledgeable advisors and begin your journey to looking out for your loved ones, long-term.