Many times people ask the question ‘what, if any, life insurance cover should I have?’ To find the right answer for your situation can be a daunting matter but one that could save your family from a lot of hardship should you die. It is therefore wise to research your options and to talk to an expert on this matter.

Should you have no dependents then most likely you would not really need life cover. Also if you are not in a position of generating a large portion of your family’s monthly income, then most likely you would not need to consider life insurance at this stage. But if your salary plays a significant role in supporting your family, such as paying the mortgage or covering the cost of other major recurring bills or even funding your children’s college education, then insurance will be an important factor to ensure that your financial obligations will still be met should you perish.

It is of course your choice how much you want to spend on a policy, but the deciding factor is usually dependent on your lifestyle, debts, number of dependents you have and whether you have any other source of income. As a rule of thumb: Many people are happy with a cover of between five and ten times the amount of their annual salary.

With this information in hand, you are now ready to make the next decision: which type of policy is right for you:

Whether it should be a term policy or a full life insurance policy is still debatable in many cases but the experts do agree that a term policy should at least be considered, provided you do not have children and you do not suffer from a life threatening illness. A term policy offers the client a death benefit paid out to a beneficiary of his choice, but it will not have a cash value should you terminate it at any time after commencement of the contract.

The more expensive policies are those which offer a death benefit and are also linked to a cash value. This kind of policy is known as “whole life insurance” and is the more traditional type of policy. The premiums will stay the same and will not fluctuate during the life-span of your policy and will stay in effect until your death.

Most employers have a group life scheme which their employees belong to and this is the most cost effective of them all, but should you terminate your employment, then the cover will automatically cease. Some employers allow any money accrued in your fund to be transferred to another group life insurance scheme if you leave – inquire whether this is the case with your employer.

It is always good to talk with an expert before making a difficult decision. An insurance expert would know how to guide you to the right type of life insurance policy for your particular requirements. It is peace of mind that you really want, knowing that your family will be taken care of in case of your death.

Looking for top tips and hints on how to pick life insurance cover that suits your needs and budget? Get the inside scoop on important life insurance considerations in our insurance guide!

categories: life insurance