Which is the best life insurance?

Looking for the cheapest life insurance can be a minefield; we listen to your needs and present the right policy for you whether it be for an individual life insurance policy or group life insurance policy. Without life insurance in place how quickly would this affect your family or families of your employees if they died. Life insurance is one of the cheapest insurance policies but there is more to life assurance than opting for the cheapest, such as should it be in trust?

What is life insurance?

Life insurance allows you to leave money behind for your family when you die and can be used in circumstances such as paying off an outstanding mortgage, covering the lost income or simply supporting them financially for a number of years.

When you take out life insurance, you pay a monthly premium. The cost of the monthly premium is determined by factors such as your age, lifestyle, general health and how much cover you need.

What different types of life insurance are available?

There are many types of life insurance and the right one for you will depend on your individual circumstances. Some of the policies available are as follows:

Term Assurance: This is the most basic type of life insurance whereby you choose the amount of cover you would like to be insured for and the term for which you will be covered, or the number of years put simply. If you die during the term of the policy, the amount will be paid out to your beneficiaries.

The main types of term assurance are:

• Level term: the amount your beneficiaries receive will remain level through the term of the policy.
• Decreasing term: the amount your beneficiaries will receive decreases throughout the term. This type of term tends to be used to for a large outstanding loan, such as a repayment mortgage. This is because the amount of debt reduces over time and therefore the policy is put in place to ensure that the debt can be repaid in the event of death.
• Increasing term: the amount your beneficiaries will receive increases throughout the term. The idea is to combat inflation and ensure that your beneficiaries will have enough money in the future.

Family income benefit: instead of a lump sum, this type of insurance would pay out a regular monthly income to your beneficiaries when you die, until the policies expiry date. With this type of policy it is important to understand what level of income would be needed to keep your family financially secure in the event of your death.

Whole of life: As the name suggests, this type of policy runs for the entirety of the insureds life and is guaranteed to pay out when they die. As this type of policy is guaranteed to pay out at some point, they tend to be more expensive than other term assurance policies.

Do I need life insurance?

Having life insurance in place is really important if you have people who are financially dependant on you such as a partner or children. If these people would be worse off financially in the event of your death, then life insurance is something that you should consider. If you have children and you are the main earner in the family, it is worth considering whether your loved ones would be able to meet the monthly household bills in the event of your death.

These types of costs may become less relevant once your mortgage has been paid or your children become adults. But you may just wish to leave a lump sum to your loved ones to ensure their future financial security.

If you are not married but live together with children, do not automatically expect that a policy will pay off the mortgage, it will not.

Can I get cheap life insurance?

As we mentioned before, life insurance premiums are determined by factors such as your age, lifestyle, general health, and the amount of cover. If you are young and in good health, then the premiums are likely to be reasonably low.

Cheap life insurance is not necessarily always the best option as you may not be getting all the cover you need, or premiums could start low and then increase as you get older.

Usually advertising is geared to drive the premiums low, picking out a young non-smoker to hook you in, we do not do that, in reality the premium will be higher than quoted so why not come to us straight away, always seek independent advice.

People with health conditions can still get life insurance although it may be harder to find and cost more. At Woodward Financials, all of our independent financial advisers are able to access the whole of the market and find the best life insurance for your needs.

Life insurance and inheritance tax

If you take out life insurance for regular income or a lump sum payment in the event of your death, then inheritance tax may be charged at 40%, depending on your individual circumstances.

One of the ways to stop this from happening is by placing the life insurance policy in trust. By doing this, you give up the ownership of the asset and it is then looked after by the trustees. This means that it no longer forms part of your estate and will no longer be included in any inheritance tax bill.

Deciding whether to put a life insurance policy in trust is a really important decision and our independent financial advisers at Woodward Financials are well placed to guide you through this process and whether it is right for you. There are various types of trust and we can recommend the right trust for your needs.

Things to consider before taking out life insurance

There are many important decisions to make when taking out life insurance and some of the questions you should think about are:

• How much cover do I need?
• What length of time should I set the term at?
• Am I covered already by my employer?
• Do I have any existing policies in place already?
• Should I place my life insurance policy in trust?

Woodward Financials were awarded best wealth management firm in 2021 and again in 2022 we have a team of advisers ready to help you answer these questions and guide you through the right life insurance policy for you and your family.

Life assurance also goes well with critical illness

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