Choosing the best life insurance policy for you can be confusing, so we've put together a few tips to help.
What you should do
- Regularly review your life insurance policy and amend it if your circumstances change. Examples could be the birth of a child, a change in occupation or an increase in your debt.
- Cover your main debts and outgoings, from mortgages and loans to outstanding credit card debts.
- Put your life insurance policy in trust. This ensures that any pay-outs made on your life insurance policy will not subject to inheritance tax. You only need to fill in a few forms and it's completely free. Your life insurer can guide you through this process.
- Snap up a good life insurance deal if you see one. When it comes to the price of life insurance policies, age works against you, so don't put it off for too long.
What you shouldn't do
- Don't accept the rate offered by your mortgage lender. To get a mortgage you will usually need life insurance; however mortgage lenders can offer overinflated prices. Get your life insurance separately and make sure you find the lowest price you can.
- Don't forget to factor in future costs. When calculating how much life insurance you need, don't forget to factor in your children's school fees, potential university fees, home improvement costs etc. But try not to overestimate, as this can result in higher premiums.
- Don't underestimate the value of a stay at home parent. Legal & General released a report revealing that replacing the work of a full time mum can cost upwards of £32,000 a year.
- Don't buy joint life insurance if you don't need to. It used to be the case that it was significantly cheaper to take out a joint life insurance policy with your partner. However in some cases this is no longer true, so it may be worth looking into two separate policies. This way, if one policyholder dies, the other policyholder can keep their policy. Effectively, this means that you get double the cover for your money.
So now you know the dos and don'ts of buying life insurance, compare life insurance policies online to find the ideal one for you.