Like many things in life, choosing the right life insurance deal can be a difficult decision. In this article, we aim to give a clear picture of the level of cover each type of life insurance can provide.
Could you need life insurance?
There’s no denying that life insurance can provide a great deal of protection for your family, and could really help in the unfortunate event that you pass away. However, depending on your current financial circumstances, you may not feel you need life insurance.
If you’re single
Life insurance can provide for your financial dependants – such as your husband/wife and children – if you pass away while the policy is valid. If you’re single and don’t have any dependants, you may feel there’s simply no need to take out a policy.
If you have a lot of money in savings
Depending on your policy, life insurance can provide a significant payout after a valid claim, but if you have a lot of money in savings already you may decide it’s not necessary.
However, keep in mind that savings can only return a certain amount above the amount paid in (i.e. the overall deposit plus interest). A life insurance policy, on the other hand, can often pay out significantly more than has been paid in – which can make it a particularly cost-effective way to protect your family.
Level term life insurance
If you pass away during the term, your family will receive a payout – provided you fulfil all the other criteria for a claim.
Level term life insurance is generally cheaper than whole-of-life cover, because there’s a lower chance of a claim being made. However, it’s likely to become more expensive as you get older, and the price may also be affected by things like your health, whether or not you smoke and various other factors.
As the name suggests, whole-of-life cover lasts until the day you die. Because it’s very likely to pay out, it’s generally more expensive than term life insurance, but it can provide that extra level of peace of mind for you and your family.
Critical illness cover
Critical illness cover can often be added onto another life insurance policy at an additional cost. With critical illness cover, you may be eligible for a payout if you fall seriously ill.
However, this is normally limited to certain illnesses – and again, you would have to meet all the other eligibility criteria for a successful claim.