Competition in the market place has made life insurance one of the most reasonable and best value products available. With such a huge number of offerings, however, it can prove a little daunting to compare life insurance. Nevertheless, with a little care and a clear picture of your particular needs, it is almost certain that there will be a product just right for you.
One of the beauties of life insurance is its simplicity. Provided the premium payments are maintained, the policy will pay out in the event of the policy holder's death. In the case of whole of life insurance, the payout is assured whenever the policy holder dies; in the case of term life insurance, the benefit is paid only if the policy holder dies within the term of the insurance (if he or she survives the agreed term, then nothing is payable).
When comparing life insurance, as with any other product, it is important to compare like with like. In the case of life insurance, therefore, remember that your age at the commencement of the cover is critical. The younger you start, the cheaper the premiums will be.
Naturally, the price you are prepared in premiums will directly determine the benefits payable under the policy. When comparing life insurance products, however, it is also worth remembering that what seems like a suitable and sufficient level of cover this year will almost certainly fail to provide the same real level of protection ten or fifteen years down the line. Instead of standard, level term life insurance (where the benefits payable remain the same throughout the term), therefore, it might be worth considering the option for updating and enhancing the level of cover provided.
This can be achieved by one of two ways: either through an increasing term life insurance – where the premiums and benefits payable are increased by a predetermined increment each year – or through an index linked term insurance where premiums and benefits are adjusted throughout the term according to changes in the rate of inflation. With either of these options, however, it will be important to find out whether the adjustments are made automatically or whether you will need to contact your insurers with instructions to vary the premium rates and benefits.
A common question is about how much life insurance cover should be taken out. This will depend entirely on your present circumstances and the actual protection you would want to provide your beneficiaries in the event of your death. The calculation typically takes into account any outstanding mortgage or other large debts, an effort to replace the principal breadwinner's regular salary, and provision for childcare or education expenses if there are children in the family. Although by no means a rigid rule, many people find that life insurance cover of at least ten times the principal breadwinner's salary is a reasonable benchmark.
Naturally, you will want to make the right decisions about a product as essential and important as life insurance. A specialist insurance broker can help you to do this by bringing to bear his or her extensive knowledge of the insurance market.
David Thomson is Chief Executive of BestDealInsurance (http://www.bestdealinsurance.co.uk) an independent specialist broker dedicated to providing their clients with the best deal on their home, motor and life insurance.
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