Which life insurance is right for you?

There is no legal requirement to get life insurance, however if people depend on your salary or your time then life insurance is very important. The flip side being if you have no dependents and are single you probably do not need life insurance.  It is not all about money you earn, you may not be salaried but if you are looking after a child then if you are gone your partner would need to pay for child care so they can continue to work.

The amount of cover you need should be balanced against the work or salary that will be lost and the likelihood of death. The older and less healthy you are the more expensive life insurance premiums will be. The higher the payout will also depend on the amount you pay each month.

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Types of life insurance

Decreasing term insurance also known as  Mortgage life insurance (not the same as mortgage insurance which will pay your mortgage if you are unable to pay it). It will allow your beneficiaries to pay off the mortgage, as it is linked directly to your mortgage its value will decrease over time. In the past there have been accusations these have been mis-sold and are bad value for money. So make sure you look at your options rather than take whatever is being offered to you by your mortgage provider.  Nearing the end of your mortgage this will become less and less good value as the payout will become smaller. 

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Increasing term insurance. The payout increases, to take into account inflation. This is a less typical type of insurance. 

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Term Life insurance. Lump sum that is set for a certain term for example over 25 years. The amount your beneficiaries will get will stay the same as will your monthly premiums, however if you do not claim during this period they will not receive anything. 

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Death in service benefits. This is Life insurance from your employer and it is usually salary indexed, for example 4 times your salary. It is a benefit many larger firms offer, you can find out from your HR department whether your package covers it. 

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Additional cover can be added for critical illness as well as death this will increase your insurance premiums and may not be worthwhile depending on your age, health and other cover you have.