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Top Tips on buying life insuranceLife insurance isn’t only appropriate for the breadwinner of a household. If, for example, one person currently stays at home to look after the children, you also need to think about insurance for them too – if they were no longer around, the remaining partner would have to fund childcare costs.

 Don’t assume if you don’t work you don’t need life insurance

Life insurance, which can be known as life or term assurance, will pay out a lump sum if you die unexpectedly.

That means your loved ones will still be able to cover the cost of the mortgage and other bills if they no longer have your salary coming in.

Life insurance isn’t only appropriate for the breadwinner of a household. If, for example, one person currently stays at home to look after the children, you also need to think about insurance for them too – if they were no longer around, the remaining partner would have to fund childcare costs.

Understand the different types of cover

The most popular type of life insurance is known as decreasing term, which will pay out a sum that is relative to your outstanding mortgage. That means as your debt to the mortgage lender decreases, so does the amount paid out by the insurer on your death. Decreasing term life insurance is usually the cheapest option, but it’s only suitable if you have a repayment mortgage which will get smaller as time goes by.

Level term life insurance, however, pays out a fixed sum at whichever point during the term a claim is made, regardless of any changes in your financial circumstances. Another option is to choose an increasing lump sum, so that the sum assured increases as time goes by.

You can also decide to go for a policy which will provide you either with a level monthly income or an increasing monthly income, rather than a lump sum.

Review your life insurance

You should regularly check that your life insurance is sufficient to cover costs in the event of your death. If, for example, you move to a property which requires a larger mortgage, then you will need to take out additional life insurance to cover the extra liability, and if any of your other outgoings change then you also need to amend the level of cover you have.

Check existing benefits before buying life insurance, It’s worth finding out if you have any existing benefits with your employer, such as Death in Service, that will pay out in the event of your death as you don’t want to end up paying for more cover than you need.

Where to buy cover

Many people buy cover through their independent financial advisor or through specialist brokers, but if your circumstances are relatively straightforward, and you are confident you don’t need advice, you can take life insurance out  in a few minutes.

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