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The Life Insurance Market

Tuesday, November 20

The need for Life Insurance to protect your family @ 10:43 AM

If someone dies with a large debt, such as a mortgage, it is important their dependants receive some kind of financial package to help pay off or manage this debt so that their home is secure and the family can maintain the standard of living they are accustomed to.

Equally, families with a sole breadwinner will need to be financially protected in the event of that person’s death, especially if they have young children. Statistics show an estimated 15 million adults do not have a policy that will provide money to help their family if they are no longer around.

There are two basic types of Life Insurance - Mortgage Life Cover and Level Term Insurance. Mortgage Life Cover is designed to pay off a repayment mortgage in the event of death or diagnosis of a terminal illness.

A Level Term Insurance policy is designed to pay out a fixed lump sum, which can then be used to pay off the mortgage as well as provide a lump sum for the family.

Mortgage Life Cover is cheaper than Level Term Insurance because the amount of cover decreases in line with your mortgage. This type of policy is best for those without dependants, as it will just ensure the mortgage is paid off.

However if you have a young family, although the mortgage would be paid off what about a source of income for your family? This is where Level Term Insurance is better, as it will provide a lump sum, which the family would be able to live on, as well as having the mortgage paid off.

What's more, increasing interest rates mean home owners are struggling to keep up with their mortgage repayments. Evidence from the Council of Mortgage Lenders revealed, ‘people whose homes were repossessed surged by almost a third during the first half of this year, to its highest rate for eight years’ Another blow for borrowers comes as the Bank of England signals it’s intention to push base rates up again to 6 percent before the end of the year. Despite compelling reasons to have life insurance, statistics indicate millions of people lack the insurance that would provide their loved ones and protect their homes if tragedy struck.

Another important thing to think about is how long you need your Life Insurance cover to last. The best way to ensure you have the appropriate cover and for the right period of time is by linking it to the term of your mortgage. As once the mortgage is paid off the need for Life Insurance is reduced.

When it comes to Level Term Insurance, it's best to consider the term in line with your mortgage or when your youngest child reaches age 21. This would then mean your family is protected throughout childhood and until they reach adulthood.

Studies show speaking to an Independent adviser will save you money. This is exactly what happened to Coral Randall and her husband Sid, who are saving £40 a month after switching their Life Insurance from the Halifax to Legal and General on the advice of their specialist adviser.

If you'd like to sort out your life insurance, and ensure your loved ones are adequately covered, then why not get a quote NOW! -- 1 comments: View - Post your own comment

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