Life insurance is something a lot of people don’t consider for various reasons, often because they don’t think they’ll ever need it. However, life insurance is a vital part of protecting your family and something most people should have in place. 

But before you apply for life insurance, it's important to understand what type of cover you need, how much coverage you need, and whether you should have more than one policy in place.

In this article, we'll look at everything you need to know before buying life insurance. We'll explain why you need life insurance, which types of life insurance are available, and how much cover you’re likely to need.

What type of life insurance policy do I need?

Life insurance is an easy way to provide financial support for your loved ones if something happens to you. There are two main types of life insurance policies available: term and whole life. Each type offers different benefits and costs.

Term life insurance provides coverage for a specific period of time (for example, 10 years). The premiums are usually lower than whole life , because cover is only temporary. Because of this, term life insurance only pays out if you die within the policy term. If you survive the term, the policy expires and you won't receive any money for the premiums paid.

Whole life insurance pays out a fixed lump sum when you die. Unlike term life insurance, it covers you for the rest of your life, providing financial protection for your loved ones for years to come. 

This means you don't have to worry about the policy expiring or renewing your cover every so often, providing you keep up with your monthly payments. Although it provides permanent protection, it is also one of the most expensive types of policy.

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How much cover should I buy?

One of the most important factors when buying life insurance is working out how much cover you need. While more is often good, this isn't always the case with life insurance. Buying more cover than needed can mean you're spending more money than is actually needed.

On the other hand, not buying enough cover could leave your family short when it comes to covering future costs.

Here's a quick rundown of some of the finances that your policy can help your family to cover:

  • Everyday living costs

  • Household bills

  • Mortgage payments

  • Loans/debts

  • Funeral expenses

  • Childcare support

The amount of cover you need will depend on your personal circumstances. If you have young children or dependents, you may want to think about increasing the amount of cover to ensure they are financially secure after your death. It also depends on your family's financial situation. For example, do they have savings or a shared income?

You also need to take into account any expenses made against your name, such as a mortgage. Even if the mortgage is in your name, your family will be required to carry out future payments in order to remain at the property. Policies like decreasing term life insurance are specifically designed to provide mortgage protection.

Funeral costs can also leave a dent in your family's finances, so you may want to ensure your policy can cover this. If you're unsure about how much cover you need, please speak to one of our advisors. They can help advise you on the right policy for your family's needs.

Who can benefit from life insurance?

Life insurance is a great way to provide financial security for those who need it most. But not everyone needs life insurance. So how do you decide whether you and your family will benefit from buying life insurance?

You're likely to need life insurance if you:

  • Are married or in a long-term relationship

  • Have children or other dependents

  • Are a single parent

  • Hold financial responsibility for your household's income

  • Work in a high-risk occupation or have high-risk hobbies

There are two main reasons why people choose to purchase life insurance - to protect their families' financial position and to provide for their loved ones in the event of their death.

  • Protecting Your Family's Financial Position - Life insurance helps to protect your family's financial position by providing them with an income source in the event of your death. In addition, it allows your family to continue paying off debts, mortgages and other commitments without having to worry about repaying these amounts themselves.

  • Providing for Loved Ones in the Event of Death - Life insurance can also assist in providing for your loved ones in the event you die. This includes helping to pay off funeral costs, outstanding loans, and even providing for childcare costs.

How can I find the best policy?

We all want the best deal in life, but when it comes to life insurance there isn't always one best option available. There are many different types of policies available, each offering different benefits and features.

It's important to understand what type of policy you need before you go ahead and purchase one. When choosing a policy, make sure that you compare the various options available. For example, some policies offer more flexibility than others. Some policies  and providers have lower premiums than others.

The cost of your policy premiums can depend on a range of factors, such as:

  • Age

  • Health

  • Medical history

  • Lifestyle

  • The type of policy 

  • Occupation and hobbies

If you're looking for a policy which covers both yourself and your partner, then you could look at joint life insurance. Joint life policies allow you or your partner to make a claim when the other dies. It also tends to work out cheaper than buying separate policies.

Once you've found a policy that meets your requirements, make sure you understand what it entails. Read the fine print carefully before signing anything. Also, check your policy documents regularly to ensure you don't miss any changes.

If you’re unsure about any aspect or would simply like the reassurance of having help from someone in the know, speak to one of our advisors who will guide you through the whole process.

Is there any way to lower my premiums?

Once you take out a life insurance policy, you are required to pay a monthly premium to your insurer. As already mentioned, your monthly payments are defined by a number of factors, such as age, health, etc. Failing to pay your premiums can result in your policy being canceled- so it's important you avoid this!

There are a few ways to get cheaper life insurance premiums, such as:

  • Applying for a policy at an early age

  • Avoid buying more cover than needed

  • Look for fixed premiums

  • Consider cheap policy types, such as term life insurance

  • Opt for joint life insurance if needed

If your premium is impacted by something such as smoker status, health, etc. it is a good idea to review your cover later down the line. For example, if you’re a smoker when taking out a policy but stop smoking afterwards, you may be able to obtain lower premiums after a certain period of time - usually 12 months.

However, remember that the cheapest premium may not be the best value for money. You'll need to consider the amount of coverage you require and the level of protection offered by your chosen policy. For more information on how to save money on cover, check out our guide for cheap life insurance.

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If you're looking for an easy, low-cost route for life insurance - look no further than Cavendish Online. We're fully committed to helping customers find the perfect policy at affordable costs.

Our team of experts work closely with you to find the best policy for your circumstances and determine how much cover you may need. u

For more information on life insurance, be sure to check out our latest news and guides.

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