Life Insurance - Getting Started

Thursday, January 7, 2010

For many, starting the process of choosing life insurance can be tough. There are plenty of options to choose from, varying from providers to types of cover, not to mention the differing price ranges. So, what are the key questions to ask yourself when embarking on such a serious purchase?


What do you need to Insure?

The most important question you need to address is what you want your life insurance policy to cover? Is it essential that outstanding debt is paid off, such as loans and mortgages? Perhaps you want to ensure that your funeral costs are taken care of. Maybe you want to protect against the loss of income or if you have children, it might be top of your list to make sure that there is a financial contribution towards education in place. It could simply be that all of these are on your list of priorities. Once you policy cover requirements have been determined, then you are at a good stage to know how much life insurance to purchase.


Who to Insure?

Then, it is important to establish who it is you are seeking to insure. There is a huge array of policies on the market. Some of which will insure you and your partner that are commonly referred to as a joint life insurance policy. A typical joint life insurance policy leaves the insurance benefit to the surviving partner.


The Term of Life Insurance Policies

The term of the policy refers to how long you need the life insurance for, essentially estimating how long your insurance needs are. When considering this, it is prudent to take into account when your mortgage will be paid off, as the amortisation period typically determines how long the term life policy should be. If children are a consideration, think about when they will complete their education. Finally, try and gauge when you will retire. Once retired, income replacement requirements will significantly decrease.

Asking yourself these questions at the onset of your life insurance research will be invaluable when making your final selection and you will have the assurance that what is such an important decision was well-informed.


Bill Nicholson