What are the benefits of a life insurance policy?
There are several major benefits of having a life insurance policy, which includes giving your family a much-needed financial buffer should the worst happen. We look at the main advantages of life cover and why it’s important to update your policy after major life changes.
What are the advantages of life insurance?
Life cover is a type of insurance policy that pays out a lump sum if the policyholder dies within the specified policy term. It can provide a financial safety net for you or your surviving partner and family, especially when the policyholder is the main income earner.
However, life insurance is often one of the most misunderstood areas of personal finance. Many people assume that life insurance is only for older people, but it can provide financial support for anyone of any age. Whether you are in your 20s, 30s or 40s, life cover can be a vital lifeline if you have a mortgage or children to support.
Firstly, there’s more than one type of life insurance policy. There are different plans available that offer various features and costs. As an example, whole life insurance provides permanent cover, although it can be expensive. In comparison, term life insurance provides cover for a specific period, for example, 10, 20 or 30 years, so it’s usually cheaper.
Why is it important to have a life insurance?
People often assume that life insurance offered by their employer is enough. But workplace policies usually only provide a death benefit equal to one or two years’ salary. Although this might cover your short-term needs, it’s unlikely to support a family over the long term.
It’s also important to review your life insurance policy when your circumstances change to ensure you have an adequate level of cover. When you get married, you could have joint financial commitments with your spouse. Therefore, you might need a higher level of cover to ensure that a surviving partner can be supported if one of you is no longer around.
When you become a parent, welcoming a child is a joyful celebration, but it’s a big financial responsibility. It’s important to update your life cover to safeguard your children’s financial future. Also, when you buy a new home and take out a mortgage, you would need to adjust your life cover to ensure your family are able to maintain their lifestyle if you died.
Many people are unaware that they need to update their life insurance after a significant salary increase or they start a new job. A change in career and wages often comes with a change in lifestyle. It’s worth reassessing your policy to make sure your loved ones are able to maintain their current standard of living if the worst happened. Similarly, if you have reduced your working hours, always check your life cover to see if it still meets your needs.
Find a life insurance policy
Life insurance ensures your loved ones are fully protected should you or your partner pass away within the policy term. If you need to set up cover, your policy will be priced according to risk elements, such as age, occupation, health, and family medical background.
At Bubble Finance Hub, we have a team of experienced insurance advisers who can explain how life insurance works. We can review or update your current life insurance policy, and we’re always here to answer your questions.
If you would like to arrange life insurance, get in touch to speak to our advisers.
As with all insurance policies, conditions and exclusions will apply.
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