When should you review life insurance?

Life insurance pays out a cash lump sum to your loved ones should you pass away.

It can provide peace of mind that your family will be financially safe if the worst should happen. The money can be used to pay off a mortgage, support costs of children left behind and help with household bills and expenses.

But should you stick with the same policy terms or review to make changes?

Reasons to review your life insurance

Are you planning to move?

You may consider increasing your life insurance if you purchase a new home, for example.

With the cost of living, particularly the increase in mortgage rates, your mortgage payments may now be higher than anticipated. It’s worth considering what would happen if your loved ones were left to pay mortgage payments if something happened to you.

Even if you are downsizing, it’s worth speaking to a broker to find out whether you still need the same level of cover.

When thinking about your sum assured, it should be enough to cover your mortgage and some extra to help your loved ones when you’re gone, which is why your policy term should be at least as long as your mortgage.

Have you added a new addition to your family?

Child Poverty Action Group releases an annual ‘Cost of a child’ report – and in 2021, the total cost of raising a child to the age of 18 stood at over £160,000 for a couple, and over £190,000 for a lone parent!

These costs are set to increase, so consider what would happen if something happened to you. Would your child remain financially supported?

Changes to your health?

A change to your health could mean you will need some support from your broker. It’s important to get advice to suit your current circumstances.

Don’t let your life insurance policy lapse!

The cost of living can mean that many of us are reviewing our subscriptions, contracts, bills, grocery bills, travel and of course our insurances.

With inflation likely to hit a 13% high by the end of this year, we would urge all to consider ensuring some sort of life policy is in place to protect those from an additional financial shock during these difficult times.

Those who could have ‘managed’ to pay for household costs in addition to mortgage payments prior to the current cost of living crisis, should they lose a household earner, may find it much harder to do going forwards.

If you have a clean medical history, life insurance can often cost less than your Netflix subscription or a round of drinks in your local pub.  It is also more important than ever to take advice to ensure you are covered correctly, and our team is available to help you adjust your policy to suit your own personal and financial requirements.

The cost of life insurance will depend on several factors:

Age is a large factor – a life policy is cheapest when purchased at a younger age.Smokers are deemed a higher risk than non-smokers.The higher the cover, the higher the premiums.The longer the policy term, the greater risk to the insurer.Your medical history, your family’s medical history plus social habits such as drinking and smoking. And taking part in hazardous activities.

Are there different types of life insurance policies?

There are three policy types available with several insurers to choose from. It’s always best to seek advice when thinking about life insurance as everyone’s circumstances will be slightly different.

Level term insurance

This policy will last for a fixed term (e.g. 10 – 25 years) and the policy will only pay out if the insured dies during the term of the policy. The amount of cover, as well as the premium, will remain the same throughout the length of the policy.

Decreasing term insurance

This policy will run for a fixed term and pay out if the insured dies during the term of the policy. A decreasing term policy is usually used to cover a repayment mortgage because the pay-out reduces alongside the mortgage.

Whole of life insurance

This policy is guaranteed to pay out when you die, so long as you have consistently maintained your premium payments. The amount of cover, as well as the premium will stay the same throughout the policy.

We know that renewing your life insurance, or even taking out life insurance for the first time, can feel overwhelming, which is why we are here to help navigate you through the process and leave you with complete peace of mind.

Find out more about A-Plan’s life insurance, and feel free to get in touch with us with any questions you may have.