Questions About Life Assurance
What does life assurance do?
It provides your family with a cash lump sum in the event of your death. This is most often invested, providing your family with either an income from the interest or access to capital at a time when perhaps their main source of income, is no longer there.
- It can pay off any debts or bills.
- It can pay for funeral costs.
- Provide for your children’s future needs or costs such as school fees etc.
- It pays off large debts such as a mortgage or bank loan.
- Cover the loss, due to the death of a divorced partner, of maintenance payments.
How much does it cost?
This depends on a number of factors including; age, sex, what level of cover you require and what contract you choose. You can also select the level of cover by choosing a level of monthly premium you feel comfortable paying.
It must be said that life assurance has never been cheaper.
Do I need a Medical?
You may need a medical dependent on several factors, the level of cover or perhaps there is something that raises concern for the company on the application. You will not have to pay for the medical, the company providing the cover does that.
Do I pay more as a smoker?
The answer is simply, yes. Should you subsequently stop, after 12 months you can revert to a non-smoker rate.
How much cover do I need?
Really as much as you feel you need or can comfortably afford. As a guide the figure of 5 times your earnings is a good rule of thumb. Another way of gauging it is to imagine what income you might receive, if you invested a lump sum at current rates of interest.
Check out what life assurance your employer provides, as a form of death in service. (Generally around 4 x Annual Salary)
Ultimately for most people it is a compromise between what you want and what you can afford.
My partner isn’t earning, how much cover do I need on them?
Most women are under insured. If your partner were looking after house, home and children, how would you cope without her? Putting aside the emotional impact, you would now have to contemplate two roles, that of mother and provider. Perhaps contemplating the annual cost of a child minder could be a good place to start.