Life Insurance:
All you've got to decide is:
How much life insurance you need.
How long you want the cover for.
What is the right life insurance for you.
Level Term Assurance - fixed premiums for a number of years and a full payout on claim at any point during the term.
Increasing Term Assurance - the cover increases every year without the need for a medical. Not as popular as Level Term, but it should be as people may require additional cover in line with increases in their income and inflation.
Decreasing Term Assurance - the payout reduces over the cover period at a flat fixed rate each year.
Mortgage Protection Assurance - life assurance where the lump sum reduces in line with the outstanding mortgage balance over time.
Renewable Term Assurance - a short term policy and therefore cheaper initially, and commonly used for protecting Company Directors. Importantly, it can be renewed without further medical evidence.
Family Income Benefit Assurance - instead of paying out a lump sum, this type of cover provides a tax-free annual income until the end of the term specified at outset.
How are premiums calculated?
The cost of life insurance depends on two factors:
How much cover you want.
How long you want it for.
Then your age, sex, occupation, health and smoking habits are taken into account.
The other issue affecting premiums is your medical history and current state of health.
How much life cover do I need?
If you're the breadwinner, you will want to keep your family in something like the style to which they have become accustomed. If you're a carer, then you want to provide cash for professionals to take over because you're not around.
Generally speaking, the figure should be enough to produce around two thirds of your earnings or £20,000 for professional care each year.
How long for?
Until your dependents are old enough to look after themselves. 20 years is about right for most people, or until your savings can adequately provide for you and your partner - possibly by the time you're 60 years old.