If you’re looking to buy life insurance, then it’s safe to say that protecting your family is a top priority. But how can you ensure you’re getting the very most from a policy? Life insurance acts as a financial safeguard for our loved ones - so it’s important to get it right.
Taking out a policy can give us peace of mind knowing our family has support, even when we can no longer provide for them. We all want a sense of security knowing that no matter what happens, our loved ones are taken care of financially should the worst happen... and that’s why the cheapest option isn’t always the best when it comes to buying life insurance.
Life insurance should help you feel confident that your loved ones are protected from outstanding debt, household bills and end of life expenses. You might even like to leave something behind to help them maintain a certain standard of living? Luckily, we have plenty of useful tips when it comes to upgrading your cover to make sure you’re getting the very most from your policy.
There are steps you can take to ensure you’re adequately insured without paying more than you need to, for instance:
- Choose the right policy for your needs
- Carefully calculate how much protection you or your family need
- Compare policies to get a good deal
- Fit your premiums into your monthly budget
- Look for optional extras
- Look for a policy with flexibility
Careful calculations are key
You don’t want your benefit amount to fall short when the time comes but you don’t want to find yourself in a position where you can’t keep up with your monthly premiums either. It’s all about getting the balance right.
In some circumstances, being underinsured can have serious financial consequences for your family. There’s no point making a long term financial commitment and paying into a policy that doesn’t adequately protect your loved ones. For instance, if your policy term or the benefit amount isn’t sufficient to cover outstanding mortgage payments, your family could struggle to keep up with the debt following your death.
In some cases, paying an extra few pounds a month could be the difference between your family getting by or facing financial hardship should you pass away. On the other hand, it could also be the difference between comfortably managing your premiums or struggling to keep up with payments.
We understand the pressure that families are under to get it right when it comes to life insurance. Which is why we have a handy Life Insurance Calculator to help you work out how much cover you need.
How do I work out life insurance costs?
To work out how much life insurance you need to buy, you must assess your family’s financial needs. How much will your family need to keep up with household bills, loan repayments and living costs without the contribution of your paycheck? And for how long?
Don’t choose a random number that sounds like it might be a safe bet. Take the time to carefully calculate what your family will need from your benefit amount if you’re no longer around. Here are some expenses that your family might expect to cover following your death:
- Funeral costs
- Mortgage payments
- Household maintenance
- Utility bills
- Living costs
- College tuition
- Family holidays
How long would you like to help take care of these expenses and how much will they cost over x amount of years?
Choosing the right policy type
With Choozi you can compare policies to find the right fit for you but first, you should decide on what policy type meets your needs. The type of policy you need depends on your personal circumstances. To help you wrap your head around all of this, let’s look at some common scenarios where a specific policy type might work best:
Life insurance can be used to protect your family from outstanding mortgage repayments. Could your family or spouse keep up with mortgage payments and keep a roof over their heads if you were to die or become terminally ill? A fixed-term or decreasing term policy could be suitable for this scenario since you can choose a term that coincides with your mortgage repayments.
Assuming you keep up with monthly premiums, you’re protected within a fixed term and your family will receive a lump-sum payment should you die, allowing them to take care of the outstanding debt. Getting the length of the term right means you’re not overpaying for unnecessary protection and you’re not leaving your family vulnerable.
Protecting your family
If you have a family, you might plan to use life insurance to help them keep up with rent, utility bills and living costs in the event of your death. You might even want to leave enough behind so that they can maintain a familiar lifestyle after the grief has settled.
If you want to protect your family until your children are old enough to take care of themselves, you could consider taking out a term policy that lasts until your youngest child has reached their 20s, for example.
How to take your level of protection up a notch
If you still feel like you want more cover, then it could be worth looking into what optional extras are available to you. Some policies offer Children’s Cover and Accidental Death Cover. There are a lot of policies that allow you to add on critical illness cover.
Let’s take a look at how some of these add-ons work:
Children’s Cover can help with extra costs that are incurred from things like medical expenses or school tuition fees if your child suffers one of the defined serious injuries or illnesses which result in permanent irreversible symptoms. What’s covered will depend on the policy details.
Critical Illness Cover typically pays a benefit amount to you if you suffer a defined serious illness including cancer, coronary artery bypass grafts, heart attack, stroke or other such diseases. What’s covered will depend on the policy details. It's important to have a clear understanding of what's covered. Check with individual insurers for details on which illnesses and injuries are covered.
Accidental Death Cover pays a benefit amount if you are killed as a result of an accident. The benefit amount and other details will vary among different providers.
Making smarter choices
The most important thing is getting the policy type and benefit amount just right. If you can comfortably fit your premiums into your budget, and you feel happy that you’ve secured the right level of cover for your family, you can rest easy knowing you’ve helped protect your loved ones. If you’re ready to secure protection for your family, Choozi can help you get started with comparing leading UK insurers.