Life insurance underpins good financial planning. It ensures that, should the worst happen, the right money goes to the right place. In this guide to choosing life insurance, Acumen offers advice about insurance policies and important factors to consider when choosing life insurance.
The purpose of life insurance
The purpose of life insurance is to ensure family members receive the money they need when a family member dies. For most, income will stop upon death and, in cases where others depend financially on this income, life insurance is a necessity.
Life insurance can help in terms of:
- Paying a mortgage.
- Protecting family against the early death of a spouse, partner or parent.
- Paying for a funeral.
- Paying inheritance tax (IHT).
- Protecting a business against the financial consequences of the loss of its owner
or a key employee.
Guide to choosing life insurance
When choosing life insurance, there are important factors to consider. The type of insurance you choose is extremely important and will depend on the circumstances of each individual. The price of life insurance can vary depending on personal circumstances, so some important factors to consider when choosing life insurance include:
- Benefits and/or premiums.
- How much cash value can you accumulate in the policy?
- Are policy fees built into your premiums?
- Is it possible to convert a term policy into a whole life policy?
- Does the policy have investment or savings built in?
- Does the level of benefits decrease or increase?
- Do the new quotes match your insurance needs better than the old policy?
Types of life insurance policies
Whole life and endowment are both types of life insurance policies. However, the most popular is thought to be term assurance. Otherwise known as temporary insurance, term assurance is usually suitable for most types of family protection needs, providing the lowest cost for the required period.
As the simplest form of life insurance, the policy will pay out if the holder passes away during the term. If not, the contract will simply end with no pay-out. In order to suit specific, personal needs, term assurance has some variations:
- Level Term.
- Renewable or Convertible Term.
- Increasing Term.
- Decreasing Term.
- Mortgage protection.
- Family income benefit.
- Life cover from your pension scheme.
- Relevant life policies.
For more information about the types of life insurance, please see our guide about all aspects regarding life insurance. Alternatively, please contact one of our helpful financial advisors here at Acumen by ringing 0800 170 7009 or email [email protected]. They will be able to advise you on available life insurance policies that are right for your circumstances.
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