If the worst does happen, it’s important to make sure you’re financially protected
We never think a critical illness is going to happen to us, especially when we feel fit and healthy, but it can and does. If the worst does happen, it’s important to make sure you’re financially protected against the impact a critical illness could have on you and your family.
A whole-of-life insurance policy is designed to give you a specified amount of cover for the whole of your life and pays out when you die, whenever that is. Because it’s guaranteed that you’ll die at some point (and therefore that the policy will have to pay out), these policies are more expensive than term insurance policies which only pay out if you die within a certain timeframe.
With a term life insurance policy, you choose the amount you want to be insured for and the period for which you want cover. This is the most basic type of life insurance. If you die within the term, the policy pays out to your beneficiaries. If you don’t die during the term, the policy doesn’t pay out and the premiums you’ve paid are not returned to you.
‘Single life’ policies cover just one person. A ‘joint life’ policy covers two people, and when one person on the policy dies the money is paid out and the policy ends. You will need to decide whether the joint policy pays out on first or second death as this will determine when the policy ends.
Providing a financial safety net for your loved ones
Getting the right life insurance policy means working out how much money you need to protect your dependants. This sum must take into account their living costs, as well as any outstanding debts such as a mortgage. It may be the case that not everyone needs life insurance (also known as ‘life cover’ and ‘death cover’). But if your spouse and children, partner, or other relatives depend on your income to cover the mortgage or other living expenses, then the answer is ‘yes’.