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Life insurance is an essential financial product

January, 08, 2025-04:09

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Life insurance is an essential financial product:

Life insurance is an essential financial product, especially for those with dependents, a mortgage, or significant financial obligations. Yet, it remains one of the most under-purchased insurances. Despite its importance, many people avoid thinking about it, as it’s tied to the unsettling reality of m

Key Points About Life Insurance:
1. Why You Need It:
- Financial Security for Dependents: If you have children or other dependents, life insurance can provide them with the funds they need if you were to pass away unexpectedly.
- Mortgage Protection: A life insurance policy can help pay off your mortgage, relieving the financial strain on your loved ones.

2. How to Buy Life Insurance:
- You can purchase life insurance online, through price comparison websites, directly from a provider, or with the help of a financial adviser.
- Comparison is Key: Always compare different quotes and types of policies. The cheapest option may not always be the best for your circumstances.

3. Types of Life Insurance:
- Individual vs. Joint Policies: Joint policies are cheaper initially, but only pay out once, typically upon the first person's death. Individual policies may be more expensive but could provide separate payouts, covering both individuals in a couple.
- Policy Terms and Premiums:
- Low-start Policies: These policies start with low premiums but can increase over time, making them more expensive in the long run.
- Reviewable Premiums: Policies with reviewable premiums have fixed rates for a set period, after which the premiums may rise.

4. Inheritance Tax and Trusts:
- Writing a Policy in Trust: This is a strategy that can help avoid inheritance tax. If you write your life insurance policy in trust, it will fall outside of your estate, and the payout will go directly to the nominated person, bypassing probate.

5. Getting the Best Deal:
- Ensure you understand the right level of coverage for your needs, as the correct cover can vary based on your family situation and financial commitments.
- Always review work-related insurance provisions, as your employer may provide life cover as part of your benefits package.

While life insurance might not be the most exciting purchase, it’s one of the most important financial decisions you can make. By thoroughly understanding your options and comparing quotes, you can secure the best policy for your family at an affordable price.