What Is Life Insurance? – Everything You Need To Know!

What Is Life Insurance? – Everything You Need To Know!

Insurance quite literally allows us to make sure that we are covered financially if something unexpected happens, just like taking out insurance for a car or home. There are other types of insurance we can take out to cover ourselves personally,which becomes especially important as we get older with policies covering critical illness, travel insurance for over 50s, and life insurance. Life insurance is one of the most important things we can invest in as we get older and can be a great help to our families when we’re no longer here. But what is life insurance?

What is life insurance?

Life insurance is a sum of money that is paid out when you die. It can be used to help with debt repayments, help with family when you’re gone, and help towards funeral costs. You pay a regular amount towards this, usually monthly. There is a range of different policies available to suit everyone and comparing policies from different companies is the best place to start when choosing what is best for you.

The amount of money that your life insurance pays out depends on the level of cover that you go for. You could choose Term policies that only run for a certain length of time and only pay out if the policy is in place when you die, or you could choose a Whole Life policy, which pays out no matter when you die if you pay a sum into your insurance regularly.

The benefits

Considering some of the benefits that come along with choosing to take out life insurance could help you to decide if it’s the right move for you. The pros of opting for life insurance are:

Debt repayments Life insurance allows you to make sure that your family has a way of paying off any debt that you’ve left behind and ensures that they don’t have to struggle financially when doing this.
Funeral cover You could choose a life insurance plan that covers your funeral. On average, funerals cost around £4000. By taking out life insurance, you can make sure that your family can cover the cost when you’re gone.
Helping close family Life insurance is ideal for anyone that has a spouse or children to think about. Pay-outs, when you die, could allow your partner to have a comfortable retirement or allow your children or grandchildren to go to university. It allows you to give them a financial boost even when you’re no longer here.

The drawbacks

It could be said that there are also disadvantages to taking out life insurance. Here are a few things you should think aboutwhen deciding if life insurance is right for you:

Costs money Life insurance costs money every month. If you’re already on a low income and cash flow is not great, you might decide against life insurance.
Limited cover Some policies won’t cover terminal illness or disabilities that have come about recently. There are certain policies that will cover severe health problems, but you can count on them having a hefty price tag.
Poppy Watt

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