Summary
It is always advisable to be sure precisely what you need in the way of cover as only you are aware of your own position. We explain what you need to understand and how to maintain it when you have it.
Ian Marsh, head of investments at Cambridge based financial adviser Peel Townsend Financial Services, cautions that it is very short sighted of people not to compare Life Insurance and/or Critical Illness Cover as he maintains that life has 2 potential risks – either being alive too long and passing away too soon. “Its absolutely vital to have some cover in place – particularly if youve got a young family,” he states. “In these unsettled times you must construct your own little stronghold because no one else is going to do it for you.”
Richard Hart at Direct Line says now is the best time to purchase such policies as there are lots of very competitive premiums around due to to the fierce vying for business within the market. “The cost of life insurance cover has fallen – gone down by about 45% in 5 years. It has never been so cheap,” he adds. “The critical illness insurance market paid out on eighty five per cent of claims in 2007 – rising from eighty one per cent the previous year.”
Check what insurance cover you already have before you take out any more. Do already own any investment plans or does your works pension plan give you any cover?
The easiest way to work out how much insurance you require is to calculate how much you would need to have the same standard of living over a year and then times it by twenty years. The minimum amount needed should settle all debts and and leave a lump sum for your family.
Make sure you get a really good deal.
When deciding on your policy it is very necessary to read the manual that many life insurance companies have of the illnesses and conditions that they include. It will list everything and should be clear-cut and easy to grasp. You will also need to review the documentation of the main points of the insurance which will contain all exclusions and benefits.
When a person takes on the responsibility of a home loan they are more often than not recommended to take out critical illness protection but should research the market and not just take the first policy proposed.
If you commence paying these insurances when you’re younger they are noticeably cheaper, very different to leaving it until you are older, when the policy goes up quite considerably.
Insurance payments can also be reduced by giving up smoking. April Holmes, manager of protection at AxA Insurance states ” as well as giving a longer and healthier quality of life, giving up smoking can save people a vast amount of money.”
If you stop smoking you can knock as much as a 1 3rd off life insurance, critical illness insurance and income protection insurance payments because the evidence that we now have proves that smoking can trigger serious illness and exacerbates any other existing health conditions.
If your circumstances alter you may need to review your insurance cover. By no means believe that once you have purchased your insurance policy that you can just continue with your life and think no more of it. At all times be very aware of the insurance you have and ensure that, should your situation change, or, is going to alter your insurance cover must accommodate these alterations. Perceivable examples are moving jobs, or or maybe you would like to have more children; regularly consider everything that may increase your costs to live and will need to to be covered if you are taken ill and are unable to work.
