Life Insurance

What is life insurance?

Life insurance can pay your dependants money as a lump sum or as regular payments if you die.

It’s designed to provide you with the reassurance that your dependants will be looked after if you’re no longer there to provide.

The amount of money paid out depends on the level of cover you buy. You decide how it is paid out and whether it will cover specific payments, such as mortgage or rent.

There are two main types of life insurance:

• Term life insurance policies: run for a fixed period of time (known as the ‘term’ of you policy)- such as 5, 10 or 25 years.
  These kinds of policies only pay out if you die during the policy. There’s no lump sum payable at the end of the policy term.
• A whole-of-life policy: will pay out no matter when you die, as long as you keep up with your premium payments.

These plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.

What isn’t covered?

Life insurance usually covers death- if you can’t provide for your family because of illness or disability, you won’t be covered.

You can buy other insurance products for these issues, which cover:

• long-term illness
• critical illness cover, or
• total and permanent disability

Do you need life insurance?

If you have:

• dependants, e.g. school age children
• a partner who relies on your income, or
• a family living in a house with a mortgage that you pay- a life insurance policy can provide for them if you die.

You might also want a policy which covers your funeral expenses.

Who doesn’t need it?

You may not need life insurance if:

• you’re single
• your partner earns enough for your family to live on
• you’re on a low income and could be eligible for state benefits.

If you’re not sure get financial advice.

How much does life insurance cost?

Life insurance can be very good value.

But monthly payments (also known as premiums) do vary, so it’s a good idea to shop around.

Check exactly what is covered for the level of the monthly payment.

The price you pay for a life insurance policy depends on a number of things.

These include:

• your age
• your health
• your lifestyle
• whether you smoke
• the length of the policy
• the amount of money you want to cover, the length of the policy, but also your age, your health, your lifestyle, and whether you smoke.