Many people who don’t have a family or a spouse may reject the idea of life insurance as not appropriate for their current circumstances – but if you own a property or have anybody close to you, life insurance is essential. Very few of us have no roots at all, and if you have any financial commitments you should consider taking out a life insurance policy.
It may feel like something you can put off until you are a little older, but this is not cost-effective. Statistically you are, on average, in better health when you are younger and the insurance companies take this into account when calculating your premium – so delaying could cost you more in the long run.
Life Insurance – Don’t Put It Off
As with most insurance products – and life insurance is no different – the array of policies on offer can be daunting. The first thing to remember is that delaying only costs you more. All life insurance providers will base their premium cost to you on risk – which, to put it bluntly – is the chance that you will die anytime soon.
Make sure you pick the right policy for you and your needs – to make this more simple, you should know there are generally two types of life insurance. Level Term Assurance (LTA) is a policy which is taken out over an agreed length of time, which is usually the length of time the policyholder expects their family to be financially dependant on them. The payout your dependants receive remains constant – they will get the same sum of money if you were to die a year or 20 years into the policy.
The other option, Decreasing Term Insurance (DTA), is usually slightly cheaper as the lump sum payout decreases over time. This is a good option if your life insurance policy is to be used solely to pay off your mortgage, as this will also decrease over the years as you pay it off.
However, it’s also important to remember to regularly review your life insurance cover – major life events such as getting married, having a baby or moving to a bigger house may mean you are no longer as protected as you once were. It’s also crucially important to be honest with your insurance provider, as any pre-existing medical conditions or history you neglect to mention could mean the company will refuse to payout in the event of your death.
If you are worried about the amount of tax that can be taken off a life insurance policy payout, you could consider setting it up as a trust – this is an effective way of getting around inheritance tax and all it takes is filling out a couple of simple forms.
Shop Around For The Best Policy
When buying life insurance, any insurance in fact, it’s always a good idea to shop around for the best policy and the best deal – insurance comparison sites are a quick and easy way to do this.
Harvey is passionate about getting you the best insurance deals possible.
