Summary
It is always advisable to know exactly what you need in the way of cover as only you understand your own situation. We explain what you need to be aware of and how to carry on it when you have it.
Ian Marsh, a Director of investments at Lancaster-based financial adviser Peel Townsend Financial Services, counsels that it is very narrow minded of people not to have Life Assurance and/or Critical Illness Insurance as he maintains that life has two main dangers – either living too long and dying too early. “Its absolutely vital to have some insurance in place – especially if youve got small childern,” he says. “In these unsettled times you must build your own little stronghold because no one else is going to do it for you.”
Paul Harris at Moneynet says now is the right time to purchase such plans as there are lots of very competitive premiums around owing to the intense competition for business within the market. “The cost of life insurance has come down – gone down by about 40% in 5 years. It has never been cheaper,” he states. “The critical illness insurance market paid out on 84% of claims in 2004 – up from 79 per cent the during the last year.”
Check what cheap life cover you already have before you take out any more. Do you have any investment policies or does your company pension fund give you any other cover?
The easiest way to estimate how much insurance you require is to work out how much you would need to retain the same level of living over a year and then multiply it by twenty six years. The minimum amount required should pay off any outstanding debt and and leave a lump sum for your family.
Making sure you get the best deal
When deciding on your insurance policy it is very important to read the guide that most a lot of insurers have of the illnesses and conditions that they cover. It will record everything and should be clear-cut and simple to understand. You will also need to review the documentation of the main points of the cover which will include all benefits and exclusions.
When people take on the responsibility of a mortgage they are normally counselled to take out critical illness protection but should shop around and not just take the first policy suggested.
If you begin paying these insurances when you are young they are noticeably cheaper, distinctly different to leaving it until you are older, when insurances rises quite considerably.
Insurance premiums can also be reduced by giving up smoking. Fiona Jackson, head of protection at Thisismoney states “Giving up smoking can save people a significant amount of money as well as hopefully bringing a longer and better quality of life.”
If you quit smoking you can knock as much as a 1 3rd off life, critical illness insurance and income protection insurance payments because the data that we now have indicates that smoking can bring about severe illness and exacerbates any other existing medical conditions.
You may have to change your policy if your circumstances alter.
By no means feel that once you have bought your policy that you can just continue with your life and disregard it. Always be very aware of the life assurance you have and make certain that, should your circumstances alter, or, is going to change your insurance policy must accommodate these ajustments. Obvious examples are changing jobs, or perhaps you intend to increase your family; regularly consider everything that may raise your living costs and must be to be covered if you are too ill to work.
