How well do you know life insurance? We asked our friendly insurance adviser Amy Webster to tell us a bit more about it – starting with some frequently asked questions.
"What does life insurance cover? And do I need it?"
"One of the first things that people like to know is what life insurance actually covers, and why they may need it," says Amy.
"Life insurance covers any cause of death, ranging from accidents to terminal illness, with a temporary exclusion for suicide in the first 13 months. It's an incredibly powerful protection tool. And most importantly, it's there for your family when they need it most. Both emotionally and financially, losing a loved one is a lot to process. So, having life cover can really take a lot of that financial burden off you."
"What's the right amount?"
"Another common question we get is, 'What's the right amount of cover?' The thing with life insurance is that each person is unique and has different needs – so there's no 'normal'," says Amy.
"Many people use it to cover large debts first, like a mortgage. But when thinking about an appropriate level of life cover, there are also many other things to consider. If you have children, for example, you may use life insurance to secure their tertiary education costs or leave them a legacy. Or you may set it up to provide your partner with a replacement income or some retirement savings. It's a lot to think about. And that's why we encourage people to have these discussions as early as possible, with our help if you wish.
"Also, who would you like to receive the money from the claim? Be that your partner or your children, make sure you include them as policy owners. This is something many people forget to do, but it usually means the claim payment can be made directly to the person you intend to benefit from the money (there may be other requirements to meet if the policy owner is under 18 years old)."
"Stepped cover or level cover: what does it mean?"
"When you use our quote compare tool, we ask you to choose the premiumstructure between 'stepped' and 'level'," says Amy.
"Stepped cover is the most common premium structure: premiums are lower at the start and more affordable in the short term, but they do increase with age. This can be a problem later in life, as we sometimes see people in their 60s or 70s cancelling their cover due to high costs."
"On the other hand, with level cover, premiums start higher but stay the same for the term length you choose (for 10 years, or until age 65, 70 or 80). This makes level premiums a good option for anyone expecting to need the same level of cover for the long term. That's why one of the first questions we ask is, 'How long do you need this cover for?'"
Not sure what you may need? Get in touch
"If you're not quite sure about how to structure your life cover, we welcome you to give us a call," says Amy. "Not only we can talk through all the different options, but we also like to illustrate things visually. For example, when it comes to stepped and level premiums, we can show you how your premiums will increase over time, using a graph."
Keeping your life cover aligned with your life
"Taking out appropriate life cover is crucial, but reviewing it regularly is just as important. You might have children, pay down the mortgage, get married, change jobs – a lot of things can happen in your life, and your life insurance needs may evolve significantly," says Amy.
"Many people forget about it so, every year, we reach out to clients to check if their circumstances have changed. If they have, we can help them adjust their life cover, so they don't have too much or too little of it – just 'right'."
We're in your family's corner at claim time
"A key part of what we do here at LifeDirect is assisting people with their insurance claims, including life cover," says Amy.
"As I said before, losing a loved one unexpectedly can be an emotional time. In our own small way, we like to make the claims process as seamless as possible, to try and take the stress off our clients and do the legwork for them. From gathering the paperwork through to liaising with the insurer, we're in your family's corner."
Here to help, always
Exploring your life insurance options for the first time? Our quote compare tool is a great place to start. And if you have any questions, get in touch with the friendly advisers at LifeDirect: you can call us on 0800 800 400 or message us here.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.