Life Insurance

What is Life Insurance?

Life insurance is a type of insurance policy that would pay-out if the policy holder passes away.

Life insurance is designed with families, or mortgage holders, in mind. That’s because a life insurance policy allows you to financially protect the people you care about by leaving a lump sum, or pays off the mortgage for them.

Do I Need Life Insurance?

Life insurance isn’t a legal requirement. So, technically nobody needs life insurance.

However, if you care about what happens to your family if you weren’t around anymore, you should get a life insurance policy.

That’s because in the UK, sadly, one in every five men die before age 65. If that was you or your husband, how would your family cope?

A parent dying early often means that a family suffers financially. Whether that’s missed mortgage payments, unable to make car payments, or simply just making ends meet. For instance, the number of people in fuel poverty after the death of a partner trebled.

Some people may say that you need a life insurance is to get a mortgage; however, this is not a legal requirement in the UK. Some mortgage brokers or banks may request it, but it’s not a legal necessity.

Do keep in mind though, if you have a mortgage, how would it get paid if you weren’t around.

Term vs Permanent

What’s the difference between a term policy and a permanent policy?

Very little. They’re both life insurance policies that can cover the same things in your life. The only real difference is how long the policy lasts for.

Term Policies

A term life insurance policy is a life insurance policy that has a fixed term. For example, a term policy may cover a mortgage for £200,000 for 20 years, or until you’re 60.

This means that you’re covered up until a certain age. In this example, once you turn 60, you’ll be uninsured.

It’s worth noting that in this example, once you’re uninsured it’ll be very expensive to get insurance at 60.

Permanent Policies

A permanent life insurance policy is a life insurance policy that won’t expire. So, no matter when you die, a permanent policy is guaranteed to pay-out. That’s why this type of policy is also known as a Whole-of-Life policy.