If you have people who depend on you financially, then life insurance should be a consideration. It may seem morbid, contemplating your death, but the thought of leaving your loved ones financially struggling in the event of your passing is an even more harrowing thought. Nothing is certain in life except death and taxes, as the old saying goes, so it makes sense to ensure that those left behind will be financially cared for when you die.
How Life Insurance Works
How life insurance works is, basically, in the event of your death, the beneficiary of the policy will receive a tax free lump sum. While the different types of life insurance you can take out do vary, this is the foundation of how the policy works.
Depending on how much insurance you take out (the “sum insured”), the money can be used to clear any debts that you may have, such as a mortgage, loans or credit card bills perhaps. Or, it can be put away for your children’s future, such as a Wedding, or education fees.
This lump sum can take care of things that your income would and can help to leave your family financially in the same position after you have gone, which is a comforting thought at a very difficult time for them.
Even if there are just the two of you, could your partner or spouse still be able to pay the mortgage or rent plus other outgoings on just their salary alone? If the answer to this is ‘no’, then life insurance could be a consideration.
Life Insurance Doesn’t Have to Cost a Lot
It doesn’t have to cost a lot, there are some good deals out there. Certainly, as research from a financial data research website revealed in July 2008*, the cost of life cover has halved in the last ten years’, which means cheaper life insurance for you!
Your life insurance premiums will be based on a number of factors such as your gender, age, health and lifestyle. But the good news is that there are a number of ways you can attract cheaper premiums.
While there are such things that you cannot change – such as your age and sex – you can make yourself a more attractive proposition to an insurer.
Being the right weight for your height is an important factor. If you are classed as being overweight then your insurer will probably charge you more for your cover than if you are within the correct height to weight ratio.
Does Lifestyle influence the Cost of Life Insurance?
Your lifestyle will influence the cost of your life insurance premiums. Someone who doesn’t smoke or drink alcohol will typically pay less for their cover than a heavy drinker and / or smoker. If you can quit smoking, this will help drive the cost of your insurance premiums down. And sticking to the Government’s recommended guidelines for drinking alcohol should help get a lower cost on your insurance, too.
Your lifestyle, such as your occupation or hobbies you have, can be a deciding factor in the cost of your life insurance, so do bear this mind. While you will not want a career swap in order to pay less for your life cover, if you have any hobbies which could be perceived as hazardous, then, in some cases, becoming a member of a recognised body for that hobby can keep the cost of your cover down.
Life insurance can provide valuable financial protection for your loved ones and as you can see from this article, it doesn’t have to cost that much in order to get peace of mind.