Having life insurance in place is very important these days, particularly for those with families that rely on them financially. While none of us want to dwell on our demise, it is important to plan for the future. If something were to happen to you unexpectedly, how would your family cope financially?
This is particularly relevant if you are the main breadwinner in the home. While there is nothing that you can do about the grief that your family would go through in the event of your death, there is something you can do about the financial problems they could face.
A good life insurance policy provides you and your loved ones with peace of mind and protection. Without this sort of protection in place, your loved ones could end up losing everything in the event of your death including the roof from over their heads. Life insurance is designed to help ensure that this does not happen.
Key facts you need to know about life insurance
There are different types of life insurance available, which means that you can find the type of policy and plan that is best suited to your needs, circumstances, and budget. Some of the key facts to bear in mind when it comes to life insurance include:
- There are two main types of life insurance coverage: The two main types of life insurance coverage are term life insurance and whole of life insurance. The former is a policy that runs for a specified period time such as 15 or 25 years. If you die during the term of the policy then your family will receive the benefit. However, if the policy is no longer active then your family will not receive any benefit.
With the whole of life policy, the premiums are made on an ongoing basis with no specified term. This means that your family will be entitled to receive the policy benefit no matter when you die because the policy lasts for the whole of life. However, you need to ensure that you are on top of your premium payments otherwise it will render the coverage null and void.
- You are only covered for death: When you take out a basic life insurance policy, you are only covered in the event of your death. There is no benefit payout for a terminal illness diagnosis or disability with life insurance coverage unless otherwise stated. There are some that come with a terminal illness benefit but this is something that you will need to check before you take out the coverage.
While you are covered for death, it is important to check the exclusions because there are some instances where the claim may be deemed invalid such as death by suicide or drug/alcohol related death. Again, make sure you read the small print and exclusions so that you know exactly what is covered and what isn’t.
- You may need a medical: Another thing to bear in mind is that you may need to have a medical before you are accepted for a life insurance policy. There are certain providers and plans that do offer life insurance without medicals even for older people. For instance, you can find no medical exam life insurance over 70. However, many of the major providers will base their decision with regards to whether a medical is required on your answers to the preliminary questions they ask when you first make your application.
Your lifestyle and age will often determine whether you need to have a medical exam before being accepted for life insurance coverage. This is because insurance companies have to calculate the risks involved when offering life insurance coverage and the medical will provide them with the information that they need to do this.
- The policy can be invalidated: Like other types of insurance coverage, there are a couple of key factors that could result in your life insurance coverage policy being invalidated. This means that the policy will become null and void so you will no longer be covered. This is something that you have to be mindful of, otherwise, you will end up wasting the money you have already paid into the plan.
The first thing that can invalidate your policy is if the insurance company find out that you have lied on the application or any claim form. This is why you need to ensure that all information is accurate. The second key reason for a policy becoming invalid is if you fail to keep up with premiums. You should, therefore, make sure that you make your payment on time every month.
- A number of factors can affect the amount that you pay for life insurance: When it comes to premiums for life insurance, the costs can vary based on a number of factors. Obviously, the type of plan you choose and the provider you go through will have an effect on the amount you have to pay. However, other factors that can affect the premiums include your age, your lifestyle, your health, and your family medical history. In some cases, the premiums may also be affected if you are deemed to work in a hazardous job or take part in any high-risk activities and hobbies.
Comparing life insurance to get the best deal
In order to find the most suitable life insurance with competitive pricing and a good level of coverage, it is important to compare policies from a range of different providers. With a wide variety of providers and policies to choose from, it can be something of a minefield when you are trying to determine which is going to be best for your needs.
Taking some time to research the different plans and provider will make this task far easier. However, you should always make sure you read the small print carefully before you sign on the dotted line. This will ensure that you familiarise yourself with all of the important information before you make your decision.