Do you need life insurance?

Last updated: March 2021 | 1 min read

If you are in the process of buying a home, then you should think about life insurance; whether you need it or not.

What is life insurance?

Life insurance is similar to an agreement between the insurance provider and you. The general concept is that the insurance provider agrees to pay up a chosen amount in the case of death of the policyholder within a specified period. The policyholder has to pay premiums.

What are the types of life insurances?

Term life insurance

A term life insurance is a promise by the insurance provider pay up a chosen sum if your death occurs within a specified period.

Whole of life insurance policy

Whole of life insurance policy promises to pay up a chosen sum regardless of when your death occurs. These types of life insurance policies are more expensive as compared to term life insurance policies, which are the more popular choice.

Why could you need life insurance?

Any person between the ages of 18 and 90 can take out life insurance. Most people take out life insurance when they buy a home using a mortgage. Your family can rely on it to cover any debt that you may have upon death. 

You will find that your estate agent or mortgage broker may be offering life insurance. However, you can also buy it from insurance providers directly.

Commonly sought term life insurance policies

  • Level term policy – If you take out a level term policy, you will be covered for, and the amount of premiums you will be paying will remain the same throughout the term of the policy.
  • Decreasing policy – The coverage will decrease over the life of the policy on a predetermined rate while the premiums will remain the same.
  • Increasing policy – the amount which you are covered for will increase over the time to keep up with inflation.
  • Guaranteed premium – Your monthly premium stays the same through the term of the policy.
  • Reviewable premium – Your monthly premiums are reviewed after a certain point during the term. Your monthly payment could go up and life insurance premiums usually go up with age.

What things you need to watch out for?

Shop around for the best deal – If your estate agent or mortgage broker is offering a life insurance policy, you should get a quote from them, but never accept their deals until you have surveyed the market.

Cancellation fee – You may find that some policies have a cancellation fee or a tie in period and you want to avoid both

What else you need to know about life insurance?

  • It is not compulsory to get life insurance. It is competely up to whether you want to get one or not.
  • If you are buying a life insurance, it will be beneficial to also make a will which sets out where you want your money to go.
  • Life insurance gets more expensive as you grow in age. So it will be financially more sound to take out a policy in your early twenty and thirties. 
  • You want to find the best deal and not the cheapest one. You want to weigh the additional benefits against the premium payments.
  • If you are working at a job, you may already have a life insurance through your employer, which is also known as death in service policy. 
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