Nobody really wants to talk about life insurance; it’s one of those tricky subjects that crops up now and again but it is something that we all need. Sometimes, because life insurance is such a taboo subject, people can quickly decide on an inadequate policy, or even neglect getting covered at all. The unfortunate upshot of this is that it can create a huge financial burden for surviving family members. The problem is that finance is the last thing your family members will be concerned about, but it is so important. Having good quality coverage protects your family, giving them the space and time, without the added stress of debts piling up, they need to grieve. Life insurance gives your family a ‘safety net’ financially, in the event of your untimely death. They can use this cash to pay off your final debts and maintain a certain standard of living. This should not be viewed as morbid or tempting fate, it is a practical solution to a terrible outcome. So how can you ensure that you buy the best life insurance to cover your family’s needs? Check out our tips on getting life insurance below:
How much cover do you need?
Before you even start to think about comparing cover, you need to know exactly how much you will need. Everyone’s circumstances are different, so, if you are a single person, living alone but want enough to pay off your debts, work out how much you owe at present, and go from that figure. If you are the mean breadwinner with more responsibility, you’ll want to protect your family and provide them with financial help for the upcoming years. The best way to work out how much cover you will need is to take your annual salary, say £40,000 a year, multiply this by five and that will give your dependants enough life insurance to protect them for the next five years.
Use comparison sites
If you have internet access it is relatively easy to use comparison services. All you have to do is provide basic information about yourself and your health, and based on this, the comparison site will give you a list of quotes of the best life insurance policies. These quotes include coverage amounts, terms and monthly premiums. You can then choose which ones cover your needs the best, and then follow a link to purchase coverage from the chosen insurance provider.
Be upfront and honest!
When applying for life insurance you must always be honest about your personal circumstances and health issues. Life insurance policies base their premiums on several factors, including your age, weight and health. When you apply for coverage, the insurance company will ask you to complete an online questionnaire and you will have to sign this. This is now a legal and binding document. Don’t forget that some life insurance companies will check your medical records. If it can be shown that you have falsified any information, you could see your policy cancelled.
Get your policy written in trust.
If you don’t want the tax man to grab hold of your life insurance money, then get it written in trust. This means that the insurance company will pay the benefits of your policy directly to your beneficiaries or survivors, and it’s all tax-free. If you fail to write the policy in trust, your estate will pay inheritance tax on the proceeds – which can be as much as 40%. According to a large UK insurance company, only about 1% of policies are written in trust. However, life insurance companies do not charge for this service and several insurance firms give the option of writing an online life insurance policy in trust.