How to Insure your family's future security

While we’re all short of cash, many of us are looking for areas where we can cut back; insurance experts tell us that life insurance should not be one of those areas. Experts are increasingly concerned that many might take the risk of not having any life insurance at all and emphasize the financial risk to your relatives if the worst should happen. Financial security for your loved ones and peace of mind for yourself should be of paramount importance especially as Life Insurance cover doesn’t have to break the bank.

So what is life insurance and what does it cover?

Life Insurance works the same way as other insurance policies. You pay a monthly premium and when you pass away a lump sum will be paid to your family. You can also purchase a policy to cover critical illness either separately or part of your life insurance policy; this will cover you should a named critical illness befall you so you can afford that special care or home adjustments.

Depending on the type of life insurance cover you want and what you want it to cover, you policy could vary in terms of complexity. You can cut through the jargon by speaking to a life insurance specialist who will be able to assess your situation and ensure that you have the best policy to cover all eventualities.

Life Insurance is easily broken down into two categories; Level Term Life Insurance, you make static payments and upon your death a fixed sum is released. This is better if you want to know exactly what your monthly payment should be and then you can budget effectively. You can also set this type of policy up as a joint policy with your partner and therefore the policy will pay out on the first death and will be able to help your partner or yourself through a difficult time.

The second category is a Decreasing Term Life Insurance, the rates are lower on this type of policy as it designed to pay off your mortgage during your working life so if the inevitable happens, your family does not have to face the extra burden of having to move. You can also make this a joint policy and there is a lot of flexibility allowed when choosing how much mortgage to repay.

As mentioned above, Life Insurance doesn’t just benefit you when you are alive. Either policy can ask for an additional illness premium or critical illness premium which means the policy would pay out if certain terminal illnesses were diagnosed. Also, in this financial climate, you may wish to consider a comprehensive policy that will cover you should you lose your job or long term sickness prevents you from working. However, experts advise that this should be purchased as soon as possible because if you are employed in an industry that could suffer potential redundancies, it is unlikely that the insurer will take the risk.

When purchasing a life insurance policy you should consider the policy caveats, read the paperwork and check your policy covers all the areas to want it to cover and whether you need to pass a medical examination to qualify.

With Life Insurance you don’t have to think about what might happen after you die, because you already know that your family is financially secure and even your funeral costs are taken care of. But that is not all; if you have the right Life insurance policy then you can also be sure that:

- Any outstanding mortgage costs are paid that your family may not be able to handle and in the current economic climate when negative equity is rife, they won’t be forced to sell up and struggle on the less than expected proceeds.

- Your children’s education would not be unsettled by having to move or being unable to meet their school fees.

- Store cards, credit cards and secured loans, whilst they might seem small and inconsequential in terms of the bigger picture, could wreak havoc with your loved ones' financial futures.
 

The benefits of having a life insurance policy far outweigh the negatives and for a very small amount every month you don’t have to be Mystic Meg to realise its pretty good.

2009-09-14 12:11:32 © Moneyextra.com

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