One way you to help make sure your loved ones are looked after when you’re gone is to take out life insurance. Each month, you’ll pay a premium, which may lead to a lump sum being paid to your dependents in the event of your death.
To ensure you choose the right policy for you and avoid common pitfalls, we’ve put together our selection of tips for taking out life insurance.
Always be honest in your application
The last thing you want to happen is your provider not paying out as a result of you not disclosing important information. Remember, claims are often successful anyway so there’s no need to withhold relevant information out of fear of being rejected.
Certain factors will affect your premiums, such as age and smoking status. While older people who smoke will generally pay more, there’s no way around this and jeopardising your cover for the sake of a few extra pounds each month isn’t worth it.
Regularly review your policy
Throughout your life, you’ll likely experience changes in circumstances that may lead to you altering your policy. For example, your job may have changed as well as your benefits or maybe your children are now of an age where they’re less dependent on you.
Additionally, once you reach a certain age, you may wish to switch to over 50 life insurance. The benefits of this type of policy are that it will generally cover you for the remainder of your life and you are more likely to be offered fixed premiums.
Take steps to improve your health
Typically, the healthier you are, the better your premium is likely to be, meaning it’s a good idea to make some changes to your lifestyle. If you’re a smoker, quitting has plenty of benefits, including reducing the amount you pay for life insurance. To be eligible, you’ll need to be completely nicotine-free for a year.
It’s also recommended that you take out your policy when you’re younger, and likely in better health. You may end up paying less on a 30-year policy as a 50-year-old than if you leave it until you’re 70 and starting to experience health complications.
Remember to read the small print
As with any legally binding contract, make sure you’re aware of what is covered and what isn’t. These can vary between providers so always ask questions if you see something you’re unsure about.
You’ll receive a form asking you to state your nominated beneficiaries. This is to ensure the right people receive your benefits when the time comes, otherwise, it will be paid into your estate. As a result, it may take longer for your loved ones to receive the money, which could also be subject to inheritance tax. This isn’t ideal if things like mortgage repayment and funeral costs need to be covered.
