Read this simple definition of what life insurance is and how it can provide for your family financially if the worst were to happen to you.
Term life insurance — understanding the basics
So, what is life insurance exactly? Very simply, it’s a type of insurance that pays out a sum of money if the insured person dies.
Just as car insurance aims to protect you financially if something happens to your car, life insurance protects your dependents financially, if the worst happens to you.
A popular type of life cover is term life insurance, it pays out a sum of money if you die during a specific timeframe that you set when you apply. This is the ‘term’ of the name and might be the years when your family is most dependent on you or the years when you have a mortgage to pay, or both.
Who needs life insurance and why
Do any of these situations apply to you? If so, life insurance could well be a good idea.
- You have a mortgage or other debts
- Others rely on you for money — a partner, children or other dependents
- Others rely on you for care that would otherwise need to paid for — for example, young children
If you’re the wage earner of the household, having life cover means money can be there to help your family maintain the quality of life they currently enjoy.
And, life insurance can be just as important for stay at home parents, whose contribution to home life and childcare would have to be met somehow if they were to die.
How much life cover is enough
This will depend on what you can comfortably afford to pay for your life insurance and what you’d like the payout to help with. Maybe you’d like it to help pay off the mortgage or cover living costs while your family are getting back on their feet.
Use our life insurance calculator to see how much cover you might need based on your finances and lifestyle.
The cost of life insurance
Life insurance is generally paid for on a monthly basis — the amount you pay is called the ‘premium’. As long as you keep paying this premium when required the policy will pay out if you die within the term.
Because no two people are the same, how much you pay is determined by a variety of factors specific to you, including:
- Your age
- Your health and lifestyle
- How long you want the cover for
- The amount of cover you need
- Whether or not you smoke
This information helps the insurance provider decide how much ‘risk’ you present to them. In other words, how likely is it that a claim will be made on your policy. The lower the likelihood the lower the premium may be and vice versa. This is why life insurance is usually cheaper the younger and healthier you are.
Things like existing health conditions and dangerous jobs can push premiums up and healthier choices like limiting alcohol consumption, not smoking, managing weight and regular exercise can help keep premiums down.
Applying for life insurance
When applying for life insurance it’s important to be honest and accurate. Incomplete or incorrect information on the original application is the most common reason for a claim not being paid out, so it’s crucial to make the effort to get it right.
What’s great is that applying for life insurance doesn’t have to be complicated or time consuming. Policies like SunLife’s Family Life Insurance make the process straightforward with no need to undergo a medical. Instead you answer questions about your health, medical history and lifestyle to get a quote and apply for cover.
There are 3 simple steps to applying for life cover with SunLife. Here’s what to expect:
- Provide information about yourself
- Your name, date of birth and contact details
- Your partner’s details if you’d like joint cover
- Your answers to a simple health and lifestyle questionnaire
- Choose the term you’d like cover for
- Choose how much you’d like to pay each month or, how much cover you’d like paid out if you die
- Choose to add optional critical illness cover to your policy
- Check you’re happy with your quote and the policy terms and conditions
- Complete the application form and get an instant decision
- If you’re accepted, you’ll be covered straightaway
So, what is life insurance?
Ultimately, life insurance is peace of mind for you and your family.
Sadly, there’s not much you can do to prevent the emotional impact on loved ones if they lost you. But you can put in place a financial safety net to help them maintain the lifestyle they enjoy now.
SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, equity release, pet insurance, car insurance, home insurance, ISAs and Will writing services.