When Is The Right Time To Get Life Insurance?
Life insurance is one of the most important types of insurance you can get, although many people donít get it early enough or have inadequate cover. If you donít have life insurance yet or you are not sure if your policy is good enough, then there useful tips will help you to decide when and what type of life insurance to get:
Get insurance now
Right now life insurance is at an all time low, so whatever age you are the time to get insurance is now. In fact, the younger you are then the cheaper the insurance is likely to be, because you are less of a risk to the lender. By getting insurance now you will have the peace of mind that should the worst happen, you will be covered.
How much insurance?
Although life insurance is relatively cheap, most people donít have an adequate level of cover. You might think that £100,000 of cover for a few pounds a month seems good, but £100,000 is not that much. Although a payout of £100,000 might seem like a lot of money, that money might have to support your family for the next 15 or 20 years. Many people simply do not have an adequate level of cover to support their families after their death.
Working out how much you need
If you are looking for life insurance, then the best way to work out how much cover you need is to work out the amount your family needs to support them each year, and then multiply this by 25 to allow for tax over 15 or 20 years. This is the amount of cover your family would need to support their current lifestyle for a significant period of time. Obviously, the amount you need also depends on how much you can afford. Generally, the more you can pay the better.
The most common form of life insurance is term life insurance. This form of life insurance is cheap, and you pay a set amount each month for the term of the agreement. You work out how much you want your family to receive in the event of your death. If you stop paying the monthly payments you lose all the money you have put in, and if you are still alive at the end of the term then there is no payout. This form of life insurance is cheap but does not guarantee payout.
Whole life insurance
The other most common form of life insurance is whole life insurance. Basically, you are insured for your entire life. The amount you pay is put into an investment fund, with your premiums usually remaining the same for the first few years before going up. This type of insurance is more expensive but has the advantage that payout is guaranteed.
Before you get life insurance, make sure that you work out exactly what sort of cover you need, and look at any other factors that will affect the price. If you smoke or have poor health then some insurance policies will charge more. Whatever type of life insurance you get, it pays to get insurance as soon as you can and for as much as you can afford.
About the Author: Peter Kenny is a writer for creditcards-gb.co.uk.
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