What to consider when choosing a life insurance package

When you come to choose you life insurance you need to decide more than just that you do want a life insurance policy. There are a surprising amount of options and you need to decide what is right for you or more importantly what will be right for your partner and family should the worst happen.

The purpose of life insurance is that if you die your family will not have to go through any hardships. The amount that will be paid to them will need to be based on your circumstances and theirs. If you are taking out a life insurance policy and you have a partner that works themselves then you will want perhaps an ongoing income for them which covers what you earned or perhaps that is set to cover specific costs such as a mortgage. You could alternatively choose a lump sum, this may be sufficient to pay off any mortgage and other debts to ensure your partner always has a home and can live off of their own earnings. Many dual income families will have either a life insurance policy each or the better value option of a joint life insurance policy.

If you have a partner that doesn’t work, perhaps who has not pursued a career to allow him or her to stay at home and be a house wife or house husband, you may need to provide more for them. You may well in fact choose a lump sum to pay off any mortgage and debts and a monthly or annual income as well to be paid to your partner. If you also have children these payments are even more important and you may want to ensure costs such as education will be covered. As well as a lump sum at your death and an ongoing income you may also want lump sums to be paid to your children when they reach a certain age, or immediately if they have already reached that age, should you die. This may well be the equivalent of what you would have given them on reaching adulthood to help them make a start in life.

As well as fixed incomes or fixed lump sums there are life insurance options linked to investment markets. This is higher risk but the amounts could end up being more. The amount you pay into a scheme will be invested in the same way that a pension fund would and if the investments do well the payout will be more: you will probably want to discuss this option with your partner though. You also need to discuss whether you are going to have term or whole of life life insurance. A term policy will expire if you don’t die by a certain age, this brings the cost down but will then be more expensive to renew. A term policy may be suitable if after a certain time your mortgage and other commitments are going to be lessened and your partner will have other income. You may also just want a term policy that will cover your children until the age at which they can begin bringing in their own income.

There are various other add-ons and options you can include in a insurance policy, for the best choice and to get a tailored life insurance policy you may want to go to a life insurance broker rather than one specific provider.



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