We all recognise the need to financially protect ourselves and our loved ones with the likes of a family life insurance plan.
One of the first forms of protection we tend to consider is life insurance also known as term assurance. A life insurance policy will provide your loved ones with a cash lump sum should the worst happen, this sum can be used to pay-off an outstanding mortgage, or simply cover the monthly financial obligations left behind.
If you are considering family life insurance to provide peace of mind knowing your loved ones are protected there are a number of factors you should consider. A life insurance product is a fairly simple insurance product, being black and white in what it covers with a number of options to tailor the plan to your needs.
You firstly need to decide the reason for the cover, are you looking to provide protection for a specific debt such as a mortgage or for a specific time period say until your children leave home. Having a clear picture of the reason your require cover will help in finding the right policy whether you choose to go direct to the insurers or use a broker.
An alternative to a lump sum payment is a monthly income should the worst happen, this is another form of family life insurance and is commonly known as family income benefit. Rather than you having to worry aout investing a lump sum you simply receive a set monthly income until the end of the policy term should a claim arise.
Family life insurance options
The first option you will have to consider is the type of cover you require.
Level or Decreasing Cover
There are essentially two options, level and decreasing term insurance, level term provides a fixed sum assured which does not change throughout the life of the policy where a decreasing plan has a declining level of cover. Often decreasing cover is used to protect a repayment mortgage or other debt which declines over time where a level term policy is used to protect an interest only mortgage or to provide a lump sum to help loved ones.
Additional cover options
There are a number of additional policy options which can provide increased levels of cover. Most family life insurance policies will have an indexation and waiver of premium option, indexation sees your cover rise over time with the retail price index (RPI) which ensures your cover is not eroded over time by inflation an. Waiver of premium protects your monthly premiums should you be rendered unable to work and earn an income due to illness or injury ensuring your premiums are met during such difficult times.
Family life insurance like when buying any other insurance product it is essential you do your research and shop around. You should always aim to get quotes from at least half a dozen insurers, doing this will ensure you get a good idea of the most competitive price on offer and the level of cover you can expect from the policy.
Next Steps
We tend to ask around ten of the leading insurers to quote and with our expertise, understanding the products and the differences in the insurers pricing we can ensure you get the most competitive rates. If you would like to learn more, need some guidance or want term insurance quotes the let us know, we are here to make your life easier.
There are a number of other useful resources on the web including the Financial Services Authority’s - Money Made Clear site and DirectGov’s insurance section.
