Life insurance is a subject often left unspoken. After all, who amongst us really wants to consider our mortality and see our lives broken down into cold, hard figures? The trouble with taboo subjects is that we’re left with many questions that all-too-often go unanswered. This is why Acumen Financial Partnership is here to help, answering all the most frequently asked questions about life insurance you were too afraid to ask.
Life insurance is one of those subjects that most of us would rather avoid discussing, like religion and Brexit. However, if you have a new, growing or established family, life insurance can give you the peace of mind that your dependents will be well looked after once you’re gone. So allow us to broach the subject and answer some of your burning questions about life insurance to help demystify this crucial form of financial protection.
What is life insurance?
Life insurance, also known as life assurance or life cover, is a type of protection policy that safeguards your loved ones financially if you die. You enter into an agreement with an insurance company which agrees to pay a specified amount after your death (known as a “death benefit”), as long as premiums are paid and up to date.
How does life insurance work?
Life insurance can pay your dependents money as a lump sum or as regular payments if the worst was to happen to you. You choose the amount of cover you require and exactly how long you need it for. You can take out joint or individual life insurance, which you can pay for with either monthly or annual premiums.
What does life insurance cover?
Life insurance can cover a wide range of household expenses that your family will need to pay when the main bread winner dies. These include everything from major expenses like a funeral, inheritance tax, a mortgage and loans to more basic (but no less important) expenses, such as food, clothes, birthdays and holidays.
How much life insurance do I need?
This is a very individual choice. It depends on how much your family relies on your income versus the cost of your premiums and what you can afford to pay. Many people underestimate the amount of life cover they need, yet overpaying can be just as damaging. It’s worth speaking to an expert for an impartial assessment.
How many life insurance policies can you have?
It may surprise you to hear that there is no law preventing you from having more than one life insurance policy should you wish. For most people one policy is enough. Circumstances can change, which may make an additional policy necessary. Having said that, many existing policies can be adapted to suit changing needs.
What is level term life insurance?
A level term life insurance policy lasts for a pre-agreed number of years and pays out a set amount if you die during that term. This simple and affordable type of life insurance plan will either cover a fixed debt, like an interest-only mortgage, or provide a lump sum for your dependants if the worst were to happen to you.
What is whole life insurance?
Whole life or whole-of-life insurance policies ensure your loved ones receive a lump sum pay-out from your insurer no matter when you die, as opposed to within a fixed timeframe. This type of product is usually more expensive than shorter-term policies but is useful for covering funeral expenses and inheritance tax planning.
How much is life insurance?
The cost of your life insurance will depend on your specific personal circumstances. There are a number of things to consider when pricing up a life insurance policy. For instance, the benefits and premiums, whether policy fees are built into your premiums and if the level of benefits are likely to decrease or increase.
For more information about life insurance, or to speak to one of our advisers, please contact Acumen today by calling 0151 520 4353 or email us at [email protected].