There are many different reasons why you might need life assurance and because I am passionate about personal financial planning I could spend all day talking about them.
However today is your lucky day as I am only going to concentrate on the two main reasons that people take out life assurance.
The first time that you take out a life policy will probably be in conjuntion with your first mortgage. Life Cover taken out with your mortgage is more commonly know as Mortgage Protection or Decreasing Term Assurance. This is life assurance at its most basic. The amount of cover you take out will match the amount and term of your mortgage. As your mortgage decreases over the years the amount you are covered for will also decrease. The benefit of this is that it keeps the cost of your cover down.
Mortgage Protection is often confused with Mortgage Payment Protection, understandably so as their names are so similar. Mortgage Protection clears your mortgage in the event of death. Mortgage Payment Protection on the other hand pays out a monthly benefit in the event of an Accident, Sickness or Redundancy to help towards your mortgage payment. Mortgage Protection is required by your Mortgage Lender wheras Mortgage Payment Protection is optional.
After Mortgage Protection, the second most common reason for life cover is Family Protection. Protecting your family against the loss of income that would be caused by an unexpected death is very important. Life Term Cover, also know as Level Term Cover is the most popular type of policy that you would take out for family protection. This type of policy provides a specific amount of life cover for a specific term.
The most common questions I am asked by customers in relation to family protection are, how much cover do I need? and for how long? There is no simple answer to these questions. The best way to determine the level and term of cover you need is to discuss your options with a Qualified Financial Adviser. A good Financial Adviser will take into account lots of different things when assessing your need for family protection. For example the social welfare benefits your dependants would be entitled to will help determine the amount of cover and the ages of your children will help determine the term of cover needed.
Whatever the need for Life Assurance you will always take it out hoping that it will never be needed. The benefit of life cover however is knowing that it will be there if you and your family do need it. Better to have it and not need it than to not have it and…..
Please use the comments below to ask me any questions you may about Life Assurance
Having the right cover is essential but paying too much for it is not. If you would like a quote on a new policy or to see if you can save on your existing policy then Click Here.