Hi my name is Katie from lifeinsurance4mums.
Let me guess; as a mum you’re just too busy working or looking after the kids to speak to a financial adviser about life insurance?
Am I right?
I thought so.
That’s why we’ve put together this quick and useful guide.
This isn’t financial advice. But it is the 6 things you need to know before you buy cover.
So lets go through them now:
1. Term life insurance
As the name suggests term life insurance runs for a fixed amount of time and has a set end date. For example, you could choose a term for 10, 20 or 25 years. If you were to die within the term of the policy, your family or beneficiaries would receive the insurance pay out. If at the end of the insurance term you’re still alive, no pay out will be made and the cover provided by the policy will come to an end.
2. Whole of Life Insurance
Unlike term life cover, whole of Life insurance has no fixed term and no end date. So if you maintain the policy until you die and maintain your premiums it’s guaranteed to pay out. Whole of Life insurance is usually more expensive than Term Life insurance because, provided you’ve paid your premiums and kept the policy in force, the pay out to your family or beneficiaries is guaranteed.
3. Amount of Cover
You can choose any amount of cover you decide. There are 2 main ways to work out how much cover you may need:
a) You could base it on a multiple of your salary, typically 10x your yearly income.
b) The level of debt you have outstanding, including mortgage, loans, credit cards etc.
Consider what would be left to your loved ones to deal with should something happen to you. If you’re a full time mum think about who would look after the children and how it would impact them financially. For example, the mortgage or rent would still need to be paid. If your husband, partner or relative had to give up work to become a full time parent for your child, who would step in and pay the bills?
The main thing to remember is that you’re ensuring your loved ones can repay any debts and maintain their everyday lives should the worst happen. Just keep in mind that even a small amount of cover is better than none at all.
4. Level or Decreasing?
When buying life insurance you can choose whether to take level or decreasing cover.
Level cover means the amount you’re insured for, will remain the same until the end of the policy. It’s used to cover debts such as an interest only mortgage.
Decreasing cover declines over the term of the policy and is ideally used to cover a repayment mortgage. For this reason decreasing life insurance is sometimes called mortgage life insurance.
Decreasing life insurance is often the cheapest way to protect your family. These policies can start from around £5 a month.
5. How much will Life Insurance cost me?
Life Insurance can cost from as little as £5 a month.
The factors that insurers consider on setting your premiums are:
• your age
• if you smoke
• your medical history
• your lifestyle
• how much cover you want
• the term required
If you’re older – or if you’re asking for a lot of cover – there’s a greater chance the insurer will ask for further medical information from your GP, or require you to undergo a medical examination before offering you cover.
6. How do I get cover?
• Comparison Sites that search the market for the best deals.
• Direct to Insurers that don’t sell through comparison sites.
• Your Mortgage Provider most offer you life insurance automatically when you take out a mortgage
• An Independent Financial Adviser
• OR go to http://lifeinsurance4mums.co.uk to get a free quote.