It can be hard to get enthusiastic about insurance, especially if money is tight. Here you are, looking to make savings and you’re going to pay out every month for insurance you might never claim.
Of course, most of us don’t like to spend too much time thinking about death, we want to get on with enjoying our lives, so we’ve put together 5 simple tips to help you quickly cut through the noise and find a solution that’s right for you.
Decide how much coverage you need
It is currently estimated that it costs an astonishing £200,000 to raise a child from birth to twenty-one and that’s without a private education. There’s obviously no way of knowing exactly how much money your family would need to sustain them if you were to die tomorrow, but there are general calculations that you can make which will point you in the right direction. Begin by calculating your long-term obligations, which may include: mortgage and debt; your years of future income; education costs and funeral expenses. If you have assets or savings subtract these from the global figure and that should give you some indication of the kind of coverage you need. If you can possibly afford it, buy more coverage than your estimate: the future is likely to be far more expensive than you imagine.
The stay at home parent needs life insurance too
If you, or your partner, are a house parent you should consider the financial contribution of that role to you family. What would be the cost of replacing the child-care and the domestic work?
Childcare and education expenses do not remain constant
Your family’s childcare needs will necessarily change over time. You need to think through the financial implications if you or your partner are no longer there to carry out the childcare. Transport arrangements for nursery and school can become complicated and potentially expensive as children progress from institution to institution. You should also consider that though your children may be in state education there are costs which will result from their attendance, such as uniform and extra-curricular activities.
Choose an adult beneficiary
Minimise the stress of your loved ones by ensuring that you leave clear directions about who will be the beneficiary of the insurance and guardian of your family.
Choose the right policy or policies
Do your research carefully. Insurance policies can be mind-numbingly complex so make sure that the coverage is right for you and that there are no hidden catches. Use a comparison website and then double-check your findings. You may even decide that a combination of phased policies will best suit your needs and give you and your family peace of mind.
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