Life Insurance simply pays out a tax-free lump sum if
you die; there is no investment value.
Life Insurance is a commonly and established way of providing
a tax free capital sum if a policyholder were to die whilst the policy
was in force.
It is important to remember that Life Insurance Policies
don’t have any investment value. If the policy finishes without
a claim, there is no payout.
Think about whether you need cover for Joint
or Single lives. This will depend on your circumstances,
so see the related question for more details.
Similarly, you’ll need to choose between guaranteed
or reviewable premiums. The rule of thumb is that guaranteed
policies have higher premiums to start with, but overall are a better
deal. Again, you can read more in the related question.
You’ll also need to decide on the term
of the cover (how long you will be covered for). Most Insurance Companies
regard 7 years as the minimum, but 20 – 25 years is the most common
length of time. If you are insuring to cover an Interest Only
Mortgage, you will want the term to match the length of the mortgage.
It will also be important to think about the age you will be at the end
of the term. Most Insurance Companies will not offer insurance past the
age of 65. A few will insure you up to 70, but that does become significantly
more expensive. Quotations offered online therefore have
a maximum age of 65.
Brokers Online are able to include Terminal Insurance
cover in your quote at no extra cost. So, if you develop an illness
and your doctor confirms that you are expected to die within 12 months
of diagnosis, the policy would pay out straight away, rather than after
your death.