Buying life insurance
isn't simply a matter of finding the lowest quote on a price comparison
site. Here we list the key points to remember.
Life insurance is most commonly taken out by a breadwinner to provide for the
family should he or she die. Cover that lasts for a set period (such as the
life of a mortgage) is called "term" insurance; if you survive the
term you get nothing back, as there is no investment element.
You can choose from level term insurance, where the payout doesn't vary
throughout the term; increasing term cover, where the payout and the premium
rise with inflation; and decreasing term insurance, where the payout falls
in line with the amount outstanding on your mortgage.
Once you have started the policy, the premiums won't go up and the cover won't
be withdrawn, no matter what happens to your health or your lifestyle. But
you must be totally honest about all your circumstances when you apply. If
you die and the insurer discovers that you did not declare something that
you knew about when you applied, it may decline to pay out.
Life insurance tips
Consider is a regular income instead of a lump-sum payout. A lump sum is often
used to provide an income anyway; choosing an income at the outset avoids
problems with fees, investment performance and possibly inheritance tax.
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