A user’s guide to life insurance

by Debra Valenza | March 24, 2017 12:07 pm

Many people want to provide for their family in the event of their death; however, the decision to take out life insurance can see you presented with a bewildering choice. Making sure you obtain the right type of insurance at a price you can afford is vital, so here is some guidance.


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Choose your policy type

The first step in finding the right policy is to decide what you want it to cover. Some relatively cheap policies do little more than provide for the cost of a funeral, while others can pay out quite substantial sums. Which? offer a helpful overview of the different policy types.

How to decide the sum assured

Different people have different needs to be fulfilled by life insurance; for example, someone with a large mortgage, and perhaps loans for cars, credit card balances and other financial commitments will want to ensure these are all dealt with in the event of their death. Others may have paid off their mortgage and large loans and simply need to ensure that their dependants have cash available to pay for their funeral. If you are working, bear in mind that many employers offer death in service cover, which will pay a multiple of your salary on your death. This amount can reduce the sum to be covered by independent insurance.


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Life, term or critical illness cover?

Life insurance can be arranged to pay out on the death of the policyholder within a certain term, such as ten years; alternatively, a whole life policy is ongoing. The latter is obviously more expensive. Most insurers will require evidence of health and the cost will, of course, be dependent on the age of the policyholder. Additional insurance can be arranged in parallel with life cover that will pay out in the event of the policyholder becoming seriously ill.

Using a broker or financial advisor

Financial advisors or insurance brokers can offer expertise and help to find and select the best policy for your needs. In addition to a wide knowledge of the products available, they will use specialist tools. An example is back office systems for IFAs, which are available from providers such as https://www.intelliflo.com/.

Choose carefully

Whichever insurance you decide upon, make sure it will cover whatever you want to protect your dependants from.

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