Joint vs Individual Insurance
Many people take out their life cover when they are young, fit and healthy. The first inclination to do so may be when buying your first home. If you were buying the house with a partner and their partner where to die in years to come and the surviving partner tried to take out some new life cover, they may find it much more difficult as over the years many every day conditions for example, blood pressure, cholesterol and other aches and pains that tend to develop as we age, can make getting insurance later on in life much harder to do.
One way to avoid being left without life cover should your partner pass away would be to take out two single life insurance plans. The cost may be slightly cheaper for a joint policy, however the difference can be relatively small and it is certainly worth considering that with two, single life insurance policies, your sum assured can double.
Rather than the pay-out of £150,000, you had on your joint policy, with two, single policies you could have £150,000 worth of cover each so £300,000 worth of life insurance cover in total. In having single life insurance plans it can also allow you and your partner to change your own level of cover as time goes by.
In the unfortunate event that your relationship should break down, if you both have single life insurance policies, it allows you both when you go your separate ways and to continue with your life cover rather than having to reapply.
The extra risk to the insurance company with a single plan in comparison to a joint plan is minimal as there is just as much chance of claiming on a single plan as a joint plan.
Joint life cover is usually the cheaper option when taking out life insurance cover, especially as tax effective life insurance plans are now no longer available. There are no more restrictions on a joint policy as there is on a single policy and all of the options remain the same such as level term insurance, decreasing term insurance, increasing term insurance. You will also get to choose your premium type as well so you can select whether you would prefer guaranteed or reviewable premiums.
The biggest difference between a joint life insurance policy and two single life insurance policies is the amount of times the plan can pay out. If you have a joint policy with your partner and one of you dies, the plan will pay out but the surviving partner will lose their life insurance and no longer be covered. Many of the customers that Proadvice deal with are surviving partners. After experiencing a loss and seeing a plan work and pay out, they realise the importance of relieving some of the financial strain left behind and are looking to ensure they have their insurance back in place again as they recognise just how important it can be.
Dying is understandably not something people want to spend their time thinking about and this is one of the reasons many people may put off taking out life cover; in fact, 1 in 3 people have no cover at all. If you have family or loved ones who would potentially face a financial crisis should you pass away, then it is important to spend some time thinking about taking out a life insurance policy.
A life insurance policy can be used to ensure that your loved ones remain financially secure, can be clear of a mortgage and that they can maintain the type of lifestyle they are accustomed to, should you pass away.
Whilst the money from the life insurance pay-out cannot ever replace a loved one, by taking away some, if not all of the financial pressures, it could be a great help. One of the main reasons that people take out life cover is not for themselves but for their families.
Family Life Cover
Trying to work out a suitable sum assured for your family can be difficult. The first thing people usually look at is what costs they are currently paying out for their children, things such as childcare, school fees and university costs, however there are a number of other things that should be taken into consideration. The day to day living costs when raising a family, gas, water and electric, the mortgage or rent will also need to be covered. If your family rely solely on your wage, then anything that wage pays for should be considered and covered in your sum assured.
Online there are a number of life insurance calculators to help you with your decision on what amount of sum assured that is right for you. The sum assured is usually recommended to be between 4 and 10 times your salary but this is recommended to be discussed with your Proadvice adviser as often it needs to be substantially more.
In many cases we have recommended to our clients to take out a family income benefit plan, rather than a lump sum payment option. A lump sum payment is much harder to budget whereas the family income benefit plan pays out a monthly amount to your loved ones in the event of your death. It is almost like your family will still receive your income if you are no longer around.
If you have death in service at work or a pension with a lump sum attached, if you are to die before retirement you could use the potential pay-out to top up your own insurance plan.