Many questions arise in our minds, such as Do I really need life insurance? Which is the best insurance policy for me? Will it provide my family protection in case of my death? What key points about U.K life insurance should my insurance broker provide me with? These and many other such questions arise in a layman’s mind considering buying life insurance.
Life insurance is a financial contract that enables you to leave behind money for your beneficiaries in the event of your death. This money can support them for years, make up for lost income, pay medical bills and mortgages. A monthly premium has to be paid depending on the type of policy you have. Your age, health, lifestyle, medical history, and the cover you need will determine how much you pay.
An insurance broker in the U.K provided some useful tips about life insurance that can provide family protection, the different types of life insurance, how they work and how to find cheap life insurance.
Tip#1:Prepare to answer manyquestions truthfully when applying: This includes all your personal information, medical history, tobacco use, driving record, and whether you have a high-risk job or hobby. An insurance broker or company can find out about your information through a third party, access your medical records, prescription drug history, and so on. Being honest at the time of the application as non-disclosure of substance abuse or pre-existing medical condition can be the most common cause of a life insurance policy not paying out.
Tip#2:Assess your current financial situation to know how much coverage you need: It would be best to have a real picture of your financial health, including emergency funds, retirement savings, and life insurance coverage through work. A rule of thumb is to buy a policy with a death benefit that equals your annual salary ten times. Consider all current and future costs and also keep inflation costs in mind when buying insurance. A joint policy may cost less than buying two different policies but will only pay out once. Insurance coverage is also provided by employers, typically four times the salary, while you are an employee of that company.
Tip#3: Understand the difference between Permanent and Term Life Insurance: A permanent life insurance provides lifelong coverage, is more expensive because it builds cash value, which can be used to cover emergencies, help pay for long-term care, supplement retirement income or even cover for the policy’s premiums.
On the other hand, a term policy provides coverage for a certain period, typically 10, 15, 20, or 30 years. It can be a convenient way to get coverage until you reach a particular financial milestone, such as covering for educational expenses or loans.
Tip#4: Life insurance policy do’s: An independent insurance broker who works with several insurance companies can be your best bet to help you find the best coverage at the best price. The younger and healthier you are, the lower the premiums are likely to be. People’s life insurance needs change as they go through life’s milestones, and it may be worthwhile considering combining life cover with protection against critical illnesses, unemployment, accidents, etc. It is always advisable to name more than one beneficiary when you buy life insurance.
Tip#5:Don’t conceal any information at the time of application: A stay-at-home parent may also need to be insured. Don’t underestimate their value, as the services they provide may cost much more than you anticipated. If you don’tplace your insurance ‘in trust,’ payouts made on your life insurance will be subject to inheritance tax. Don’t pay your premiums, and you may face payout rejection.
Nowadays, you can buy life insurance online to save the commission paid to insurance brokers, use price comparison websites, and cashback sites to help you get a better deal.