What is Life Assurance?
Life assurance is a type of insurance that pays out a lump sum on the death of the insured person. It’s often used by people looking to protect their families financially in the event of their death. Life assurance can be used to pay off debts and mortgages, cover funeral costs, set up a trust for children, or leave money for relatives.
The most common types of life assurance products are known as whole-of-life and schemes that only pay out when you reach a certain age, such as an over-50s plan. Whole-of-life products guarantee to pay out whenever you die, though you may be able to end the policy early and get a cash return minus the fees.
When deciding whether life assurance is right for you, it’s important to consider your personal circumstances and how it would affect your family should you pass away. Here are some of the things you should think about when making this important decision.
How much cover do I need?
You should consider how much money your family would need if you were to pass away. This will depend largely on your current financial situation and the dependents you have, including any children.
What type of cover is most suitable for me?
When deciding which type of life assurance product is right for you, make sure you understand the differences between the available options. Whole-of-life policies always guarantee a payout, but these have higher premiums due to the more extended protection they offer. Whereas over-50s plans have lower premiums and are best suited to those looking for a cost-effective form of life assurance.
Are there any exclusions?
It’s also important to understand any potential exclusions that may apply to your life assurance policy. These may include circumstances such as suicide, or if the policyholder was engaged in criminal or dangerous activities. If any of these apply to you, you will need to discuss them with your insurer and they will be able to advise you if this will affect your policy.
How do I take out a life assurance policy?
Once you’ve decided that a life assurance policy is right for you, the process for setting it up is quite straightforward. You’ll need to provide some personal and financial information and disclose any medical conditions you have. Some insurers may even ask to speak to your doctor. You’ll then need to decide on the type of policy and the provider before signing and paying for your policy.
Life assurance can help give peace of mind knowing that should the worst happen, your loved ones will be able to pay off debts and support themselves financially. It’s important to make sure the cover you take out is suitable for your needs and provides the financial protection your family needs.