How Do I Pay for Life Insurance?

If you are looking for life insurance, you may quickly realise there is a lot of information out there. It is important to understand the different aspects of life insurance before you buy a policy, especially when it comes to the cost of life insurance.

Life insurance can be very beneficial for you, whether you are hoping to leave money behind for your loved ones or ensure your family has enough money to pay for the mortgage and living expenses. For this reason, it is key that you are able to access a policy that is suited to you and your needs.

At Caspian Insurance, we work with a range of the industry’s top providers to identify a suitable life insurance policy for your circumstances, including your budget.

How much does life insurance cost?

How much you pay for life insurance usually depends on how much life cover you want. This means how much you want to be paid out if you were to pass away or be told you have 12 months or less to live, known as a terminal illness benefit. Insurance providers will also calculate the cost of your life insurance based on how much of a risk you are; in other words, how likely it is for you to pass away during the cover term.

The amount you pay for life insurance can depend on a number of factors. This can include your age, whether you are a smoker and your current health. The older you are, the more likely it is that your GP will be asked to provide additional medical information. You could also be asked if you have any particular hobbies, as some hobbies are more extreme than others!

How much cover do I need?

It can be difficult to try and predict the pay-out amount you might need from your life insurance. There are a number of factors to help you determine this, such as debt, mortgage, your income and how many dependents you have. A dependent is someone who relies on you and your income, such as children or a partner.

It may be helpful to add up your debts, including your mortgage, and any expenses that you would want the insurance to cover. This can include your monthly outgoings and any other costs such as school fees. You should also check if you already have any cover. In some cases, some employee benefits packages may include death-in-service cover.

Do I have to pay for it today?

It is important to understand that life insurance can be very affordable. You do not have to pay anything up front when you take out life insurance. All of your payments are made by direct debit, and you are able to choose the best date in the month for this to go out on. While it does vary from provider to provider, your first direct debit payment usually goes out at least 10 working days after your policy starts.

This is known as your monthly premium, and it is paid every month until the end of the policy or until a claim is paid depending on the type of policy you’ve taken.

It is important to understand that you do not get your money back from insurance policies, as they are not investments. It is similar to insuring a car; when you pay to insure your car for a year, but you do not claim by the time the contract ends, you do not receive any money back.

What happens if I cannot afford the payments?

You may find yourself in a situation where you are unable to afford the monthly premium, such as losing your job, or you have taken on extra financial responsibilities. It is key that you regularly review your cover, as it will inevitably need to change at some point during the term for one reason or another.

Reviewing your policy can ensure your premiums are still competitively priced, and that you still have a suitable policy to meet your needs.

Unfortunately, if you do not keep up with the monthly premiums then your cover may end. Take some time to consider your options if you find yourself in a situation like this.

Please note the above does not constitute as financial advice and any application made is subject to your chosen insurers full underwriting process.

If you require any further assistance, or you are looking for a quick and easy comparison on life insurance, get in touch with us today.