If you have a life policy, can you recall the level of cover you have in place? The majority of people take out a life policy when they take out a mortgage, file it away and forget about it. This can be a huge mistake. The level of cover you took out a while ago may not be sufficient to cover your current circumstances.
Figures from a major insurer1 indicate that 40% of Britons who have life insurance only have enough in place to cover their mortgage. This could result in financial strain on their families, who would still have to pay all other household bills and expenses.
Make time to review your policy
No matter what your circumstances, you should think about reviewing your life insurance cover regularly, especially if you’ve experienced a major life event, such as starting a family. Having enough cover to pay off just your mortgage might have been adequate prior to the added responsibility of being a parent, but now you’ll want to ensure there’s sufficient insurance in place not only to pay off your mortgage, but also to provide additional funds to ensure your loved ones could continue to have a reasonable standard of living if you were to die.
Consider critical illness
With a growing family to provide for, many people also opt to take out critical illness insurance. This type of cover is designed to pay out a tax-free lump sum in the event of a diagnosis of a serious illness (as defined in the policy). Income protection cover is also worth considering. If you were unable to work due to an illness or injury, it would pay out a tax-free monthly income.
Protection policies can safeguard your finances, your home and your family in the event of incapacity, a serious illness, accident or death. An independent financial advicer can help make sure that as your life changes, your cover changes to match your circumstances.
1Direct Line, 2017