What value of life insurance do I need?

One of the most popular questions we get asked at Life Insurance Quotes is how much life insurance do I need. The answer is different for every customer and you need to assess your own circumstances. Do you work? Does your other half work? If you weren’t around would your family have to pay for child care? How much would it cost for your family to pay off their mortgage and own their home outright? How much money would your family need to comfortably live without your income?

You may also have school fees to take into account if your children are in private education. The level of cover you need will increase as you have children, and buy more expensive homes, but will then reduce again as your children get older, you pay your mortgage off and the need for child care get’s smaller.

Is term life insurance the cheap life insurance?

Term life insurance is cheaper than whole life insurance, but should not be dismissed as cheap life insurance as it still offers a fantastic level of cover. Term life insurance offers customers cover when they need it the most, and is the most popular form of life insurance offered in the UK for many reasons other than cost.

How does life insurance work?

Life insurance is one of the most important insurance policies you will ever take out, and it’s also very simple to understand. You will take out a life insurance policy, either over a certain term, or for your whole life, and if you were to lose your life during the term of your policy, the life insurance provider will pay out a lump sum payment to your family.

What is term life insurance?

Term life insurance is life insurance offered over a certain term, usually the 25 to 30 years of your mortgage. Term life insurance offers customers cover when they need it the most, but runs out once the customer has paid off their mortgage and their children have left home. Term life insurance is far cheaper than whole life insurance because the majority of customers outlive their policies and never make a claim.

What is whole life insurance?

Whole life insurance provides customers with life insurance for their whole lives, and is more expensive because every customer will eventually get a payout for their family. Whole life insurance customers are also able to borrow money against their final payout later in life as they no longer need such a high level of cover.

How much more do I pay for whole life insurance?

Whole life insurance costs significantly more than term life insurance, because every customer will eventually make a claim with whole life insurance, whilst the majority of customers outlive their policies and never make a claim when they take out term life insurance. The typical whole life insurance policy will cost around eight times more than term life insurance.

Is a life insurance payout taxable?

A life insurance payout is not taxable, so customers who leave £300,000 to their families can expect their family to receive £300,000. The rest of the estate may be subject to inheritance tax however which makes life insurance an effective way to leave money for loved ones, particularly through whole life insurance.

Should I buy life insurance?

We can’t tell you to buy life insurance, but we can tell you that you should seriously consider it if you have any form of financial responsibility. If you own a house, rent a house with a loved one or have children, then you have financial responsibilities, and you should look to protect them if the worst was to happen to your tomorrow.

How long should I keep my term life insurance policy?

Term life insurance is designed to offer you protection when you need it the most. Once you’ve paid off your mortgage, your children have left home and become financially independent and you’re confident your family could cope without a payout then you will know it is time to end your term insurance.

Do life insurance companies ever deny claims?

From time to time an insurance company may refuse to pay out a life insurance claim, although only if they have been deliberately misled by the holder, to obtain a cheaper premium rate or higher payout. It’s important to be totally honest with your life insurance provider and to update your life insurance when you move house, get married or have children.

Comments are closed.