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No one likes to think about a time when they’re no longer around, but life insurance offers protection and reassurance to you and your loved ones for this situation.
If your expenses are not taken care of by the death benefits payable by your employer, or by other assets you own which can be sold or which produce an income, then you should consider a life insurance policy.
Here are some of the most common reasons to make life insurance a priority:
Many of us depend on two incomes or on one parent staying at home to look after the children every day. Life insurance can help the surviving partner cope financially, by helping to maintain the family’s standard of living. That way, life continues as normally as possible, with minimum upheaval.
As well as providing income to cover normal everyday living expenses, your family may also need to manage any outstanding debts, such as paying the mortgage, credit cards and car loans. Other expenses include funeral and burial costs that can easily run into the thousands.
We all want what is best for our children. Taking out life insurance can ensure they will have money and resources available to them, maybe to support with further education, university or get a foot on the housing ladder, even if you are no longer there to provide for them.
Even if you don’t have many assets to pass to your loved ones, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This is an investment which can set your children up for a solid financial future and provide for any monetary needs that arise.
No one can truly predict the future. But having life insurance means you and your loved ones can prepare for any eventuality. Even with a small policy, you may find yourself sleeping a little easier at night knowing that your family has protection in place should something happen to you.
Life insurance is a type of contract which pays out an agreed amount – the sum assured – if you die during the lifetime of the contract. You choose the amount and length of cover needed and pay monthly or annual premiums determined by factors including age, health and lifestyle. The two main policies are:
Runs for a fixed period such as 5, 10 or 25 years and is designed to pay out if you die during the term of the policy. If you die after the term has ended, your provider will not pay out. There are three main types: decreasing, level and increasing term.
Decreasing term: A popular type of cover for homeowners. Decreasing term policies are designed to pay off an outstanding debt, like a repayment mortgage, so the sum assured decreases in value as your outstanding mortgage become smaller. Decreasing term policies tend to be lower cost than the other term cover options.
Level term: Covers you for a set sum that remains fixed throughout the lifetime of the policy. Just as with a decreasing term, it can be used to pay off debts. However, it is also used to leave a legacy or help your loved ones cope with other financial considerations.
Increasing term: This is the exact opposite of a decreasing term policy. The sum assured increases over the life of your policy in line with inflation. This helps to protect the pay-out against the rising cost of living. Insurers will also raise premiums to meet the increased assured.
Pays out irrespective of when you die – rather than within a specified time frame – if you keep up with your policy’s premium payments. It tends to be significantly more expensive than term insurance, making it less popular, but can help reduce your family’s tax bill, particularly inheritance tax.
Life insurance usually only covers death. If you can’t provide for your family because of illness, you won’t be covered. Critical illness insurance covers specified serious illnesses and pays out a tax-free, one-off payment. This can help with mortgage payments, rent, debts, or alterations to your home, for example wheelchair access. It can also be used to protect against the loss of pension income if your illness means you can no longer work or, alternatively, give you options for returning to work in a reduced capacity, or maybe allowing for a career break while you recover.
At Chase de Vere Medical, we pride ourselves on the strength of our enduring professional partnerships. We are delighted to have joined forces with Zurich®, one of the world’s largest and most renowned insurance companies, and to be able to offer BMA members a preferentially priced life insurance and critical illness solution. Financially protect you and your loved ones with our specially discounted offer available exclusively to BMA members.
