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Facing up to the possibility of death is something that every person experiences as they get older. And if you have many dependants – for instance, children or sick relatives – considering what may happen to their welfare in the event of your death is important. This is why many people choose to buy life insurance. If you hold a life insurance policy and you happen to die, your beneficiaries will receive a one-off lump sum or annual payments for the remaining term of your policy, depending on the type of cover you have purchased. Indeed, there are many different kinds of life cover available, each of which offers different benefits.
If you're eager to take out a life insurance policy but you're worried about how you'll make future payments, there are several different payment options available. Level term cover allows you to pay a lump sum for a policy that lasts a specified period, usually between five and 40 years. This kind of policy is beneficial if you want to invest part of your savings in life cover but don't want to make regular payments. However, should you happen to die after your policy elapses, your dependants will not receive any payment. In contrast, renewal term cover lets you renew your cover at fixed intervals of five or ten years, subject to your insurer's agreement. The benefit of this type of cover is that you can increase the length of your policy incrementally every time it is up for renewal.
What's more, your insurer may offer different ways of calculating your life insurance premiums. Guaranteed premiums, for example, mean that your payments stay the same for the length of your cover term. This benefits people who want a fixed prediction of their outgoings over a given period of time. Conversely, renewable premiums are a riskier option, in that they may increase or decrease at each renewal date. Many insurers may also offer joint policy applications, which could save you and your partner money in the long run. If you're unsure of which kind of life insurance policy best suits your budget and your individual needs, speak to your chosen insurer who may have a dedicated team of people to offer valuable advice to potential policyholders.
When you're choosing life insurance, however, it's important to consider not only the effects of paying for such a policy during your lifetime but also the benefits it will offer your dependants when you die. For instance, will your beneficiaries benefit more from a one-off sum or regular annual payments from your life insurance policy? If it's the latter, consider including family income benefit cover as part of your policy since this will pay out in instalments for a fixed period. Remember, all insurers offer different policy options for life cover so it's best to research all policies on offer and choose the one that best suits your personal requirements – and those of your dependants – before making a purchase.
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