Life insurance – do you really need it?
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Life insurance provides your family and loved ones with financial support should the worst happen to you. Who needs it most and what are your options?
Life is full of surprises that can sometimes put your family in a difficult situation, especially if they rely on you financially. Imagine that you die tomorrow: what would be the impact on your family? Can they afford to pay for the funeral? Who would pay the mortgage? What happens if your family cannot make the payments?
One of the most important financial planning decisions you can make is to create provisions for them through life insurance, also referred to as life cover or life assurance. Unfortunately many people do not realise this until it is too late.
Who needs life insurance?
Life insurance is most important for people with partners, children or family members who are dependent on them for financial support. For example, if you are the sole breadwinner for a large family with little savings, then life insurance would be essential. Most people apply for life insurance when they buy a home with a mortgage and when they have children.
People without dependents or a mortgage may not need life insurance. However, they may wish to leave their loved ones money to cover funeral plans should the worst happen. According to the Average Funeral Pricing 2013 report by SunLife , the average cost of a funeral in the UK stands at £3,456 an increase of 5.3% from 2012. This cost doesn’t include any extras such as flowers a memorial or catering!
With costs predicted to rise further in the future, it could make sense to invest in a life insurance plan that will provide not only peace of mind for you, but also financial support to your loved ones when it is needed most.
How does life insurance work?
Generally life insurance plans involve a monthly premium that varies depending on the applicant’s age, the amount of cover required and medical status. In the event of death, a cash sum is paid out to nominated beneficiaries.
What types of life insurance are available?
Term insurance, is where a lump sum is paid out should death occur within the length of time or term for which you are covered. You can choose the length of time and amount for which you want to be insured. If death does not occur within the term, the insurance ends and you wouldn’t get anything back.
With a level-term insurance policy, the amount of life cover stays the same throughout the term. With a decreasing-term policy the amount of life cover decreases over the term and is often used for covering a debt that reduces over time, such as some mortgages.
Another type of policy is whole of life insurance, where cover continues for life as long as you keep paying the premiums, which are determined based on your age, the amount of cover you want, your health and occupation.
Another whole of life policy is over 50s life insurance, where a medical is not required to take out the policy. This option is popular amongst older people, as they may not be eligible for other types of life insurance because of old age or ill health.
Sun Life Direct offer Over 50s life insurance, term life insurance and Funeral Plans.
For more visit www.sunlife.co.uk
SunLife is a trading name of AXA Wealth Services Ltd which distributes financial products and services. AXA Wealth services Ltd is a company limited by shares and the registered office is at 5 Old Broad Street, London EC2N 1AD (registered in England No 02238458). AXA Wealth services Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration No 465753)
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