A family life insurance plan generally refers to two types of ‘term’ life insurance - ‘level term’ or ‘decreasing term’ life insurance.
If you have children who are still at school or other dependents such as a partner who relies on your income, life insurance could provide for them if you were to pass away. Such a loss could be devastating to your remaining family and their quality of life, so the last thing you’d want is to leave them with financial woes.
If you have a partner or spouse, it’s also important to consider covering you both, either on a joint policy or as individuals via two single policies.
Be in the know
‘Term’ life insurance policies run for a fixed period of time (known as the ‘term’ of your policy) eg. 10, 15 or 25 years - but only pays out if you were to die during the term of the policy. There’s no lump sum payable if you were to outlive the policy term.
With a ‘whole-of-life’ insurance policy, the clue is in the name. Unfortunately, we all die one day, so as this policy is ongoing, it will pay out a lump sum whenever that day comes.
As you’d imagine, these policies are typically more expensive than term insurance policies since as long as you keep paying your premiums, the insurer will always have to pay out, whereas you may outlive a term insurance policy.
How could my family use a life insurance payout?
The family members who you choose to benefit from your life insurance policy can use the payout however they like. Typically, it’s usually spent on things like:
Repayments on a mortgage, or even clearing any outstanding mortgage
Replacing your wages, for day-today living costs
Children’s school or university fees
Costs for a funeral - in line with your wishes
Taking out life insurance for your family gives them the freedom to continue to thrive in life, whatever they may need.
You may already have a life insurance policy in place but haven’t looked at it for some time. It’s certainly worth having a review to see if it still fits your needs and speaking with us to see if we could also save you some money. Speak to the Cavendish team over the phone or on live chat, and we’ll be able to give you all the information you need to help you decide what’s best for you.
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