All insurance policies are there to protect you and your family in case the worst happens, and this is illustrated nowhere more bluntly than with life insurance. Like making a will, life insurance is something that many put off as nobody likes to be reminded of their own mortality. But if the worst did come to the worst, it is essential that you protect and provide for your loved ones.
Traditional life insurance is designed to pay out a set amount when the policyholder dies, but this type of policy is decreasing in popularity for various reasons. The average life expectancy in the UK is such that by the time most of us pass away, our dependents will have long grown up and will not need the security provided by a life insurance payout. Similarly, this long life expectancy leads many to feel simply too young to be thinking about life insurance. This second fact in particular has led to a rise in the number of ‘Short Term’ or ‘Level Term’ policies.
Short/level term life policies
A short term policy is exactly as it sounds; the coverage period lasts for a certain term and if you die within that period, the policy pays out and if you don’t (which you would hope!), it doesn’t pay. This is a great way to ensure that your children’s education will be paid for even if you were not around to provide for them or that your spouse will be able to continue providing for your family without the benefit of your income. Ironically, the only real disadvantage of short term life insurance is that some feel as though they have wasted their money if they don’t die within the period.
Avoid the pie eating contests
If the cost of life insurance can seem prohibitive, there are various things you can do to cut the costs. The first is to quit smoking as this can more than halve the cost of your policy. Often you will be asked questions about your general health, hobbies and career so avoid sky diving, pie eating contests and being a racing driver and you will save money. However, do not be tempted to lie about pre-existing health conditions as this could invalidate your policy.
Where to get the best deals
Some of the best life insurance policies can be found using an online broker such as Cavendish Online or Moneyworld. Because of the complexities of life insurance, it is helpful to take assistance when searching so these brokers are ideal. However, if you would prefer to approach insurers direct, Aviva, Aegon and Zurich are consistently the cheapest on the market.