Insurance4 Important Life Insurance Questions Answered

4 Important Life Insurance Questions Answered

If you’re thinking about taking out a life insurance policy, we understand how confusing it can seem if you’re not well-versed on the topic.  

Well, you’ve landed on the right article, as we’re going to answer the four top life insurance questions to help clear up the confusion... 

Why do I need life insurance?

Life insurance isn’t the nicest thing to think about, but it is so important if you want to protect your family.  

If you were to unexpectedly pass away, do you think your family could meet all the household and essential living costs without your financial input? 

When you take into account everything you pay out for, such as mortgage/rent, school costs, car payments, petrol, groceries, electricity, water, gas... it all starts to add up quickly!  

Life insurance can help to provide a financial safety net and protect the future of your loved ones, plus allow them the time they need to grieve in peace without unnecessary stress. 

What age should I get life insurance? 

Unfortunately, we can’t recommend a specific age to take out a life insurance policy as it is all dependent on your personal situation. 

It’s common for people to start thinking about life insurance before a major life event – for example, having a baby or purchasing a property.  

Therefore, it could be appropriate for someone aged 20 to buy life insurance if they have a dependent... on the flip side, it may not be necessary for someone aged 50 if they don’t have children or a mortgage.  

It’s important to note that life insurance isn’t available to people under the age of 18 and most insurers have an age limit of around 85 years old. And just be aware, the later in life you take out life insurance, the more expensive your weekly/monthly premium could be.  

Who should take out life insurance? 

Life insurance is optional, but it could be a great idea if you a partner or children that depend on you financially. A lump sum and/or regular payments would be paid out if you were to pass away, ensuring your family will be looked after in the future.  

Some mortgage providers may even require you to take out life insurance as part of the acceptance criteria, so they have assurance that the loan would be repaid if you were to pass away.  

Look at the below points to determine if you would be a good match for life insurance: 

  • You have children or you’re about to have a child. 

  • You’re the main or dual earner in your household. 

  • You’ve just bought a house. 

  • You want to cover the cost of your funeral. 

How much life insurance should I get?

MoneySupermarket found that the majority of Brits with life insurance underestimated their coverage amount by almost £50,000 on average. 

Choosing an appropriate coverage amount is a very important, as you don’t want to leave your loved ones short! You can calculate your required level of coverage in two ways: 

1.     Replace your income 

This is likely to result in a larger coverage amount, giving your family enough money to cover bills as well as a bit of extra money for any unexpected costs.  

In order to calculate your coverage amount, simply multiply your income by the number of years you’d like to provide for your partner and/or children. 

For example, if you earn £40,000/yr and want to support your family for 4 years, you’ll need coverage of £160,000. 

2.     Cover your bills 

Add up the amount left on your mortgage with any other debts you may have, such a car or wedding loan, and use this figure to estimate your coverage amount. 

For example, if you still have £50,000 on your mortgage, plus £10,000 on a car loan, and credit card debt worth £2,000, you may want minimum coverage of £62,000. 

However, you may want to increase this further to fund additional household expenses, including council tax, groceries, gas and electricity bills, and education costs.