Life insurance pays a tax-free lump sum if you die whilst the policy is in
force - this means that you can leave money for your next of kin to cover your
debts and mortgage, or to provide them with an inheritance.
Life insurance is an extremely useful and affordable form of insurance, and
as long as you are under the age of 68 you will be able to arrange it. Beyond
the age of 70 it gets difficult and expensive to find life insurance.
There are a few different types of life insurance and prospective purchasers should take care to understand their personal needs before signing up for a policy. The life insurance industry is highly regulated and only certain types of companies are authorised to provide advice. The factors you will need to consider before selecting your life insurance policy will include your marital status and whether you have any children and their ages. You'll also need to consider any outstanding debts that will need to be repaid in the event of your death, for example a mortgage or business loan.
If the life insurance is not related to a mortgage, it's up to you how much
you want to insure for and for how long. The premium will be calculated accordingly.
If you are insuring to protect an Interest Only Mortgage you need to have enough
insurance to cover the mortgage, and correspondingly the term will match the
length of the mortgage.
If you are insuring to protect a Repayment Mortgage you should take out Mortgage
life insurance, because this is designed to decrease in value over time as the
mortgage decreases.
Most life insurance policies also include Terminal Illness cover at no extra
cost - so if you are diagnosed with an illness from which your Doctor expects
you to die within 12 months, the insured sum will be paid out immediately on
diagnosis.
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