Deciding to make an investment in 50-plus life insurance is tricky. You may not know whether or not it’s worth doing at this stage in life, or you may have other general queries about it. You’re not alone – most people will have similar questions, so below are answers to some of the frequently-asked questions (FAQs) regarding life insurance…
Why invest in it?
Life insurance is an investment you make not for yourself, but for your loved ones. Imagine the worst happens – you pass away unexpectedly, leaving a grief-ridden partner, children and extended family members behind. It would be a very tough time; having to grieve whilst getting on with day-to-day life. For your partner especially, this will be tough – they not only have to deal with their own feelings of sadness and loss, but take care of any children, too. Why leave them with financial burdens too, if you can avoid it? Taking out life insurance could help cover the cost of your funeral expenses, any outstanding mortgage payments or even just help out when your family is left living on one income.
What will it pay for?
This depends on the value of life insurance policy you take out, or the type. For example, there are specialist mortgage expenses plans you can take out. There are other policies too, like end-of-life expenses plans, or level-term policies (which pay out a fixed sum of money upon death). Opting for the latter could help you put away more money than might be immediately needed – helping your other half pay for future financial burdens, like university fees.
What length of time should my policy span?
This all depends on your individual situation. For example, if you think it’ll only take five or so years to finally pay off your mortgage, arrange for your mortgage protection policy to last for the next six or so years (giving you a 12-month buffer). However if you want to plan ahead for your children’s future, think about their age. If they’re 16 or 17, they probably won’t be financially independent for other five or ten years – so arrange for your policy to last the next decade. If they’re in 30’s and in a well-paid job, perhaps you should focus on end-of-life expenses instead; helping them pay for your funeral.
In what instance would my policy not pay out?
There are certain restrictions on different policies, so this is something you would have to check with your specific insurer. Some won’t pay out if the cause of death is suicide, or if drugs are found in your system. Likewise, if you declared yourself a non-smoker but traces of nicotine were found in your body after death, your policy could be put in jeopardy. Voluntarily putting yourself in harm’s way could do the same, so it’s worth asking your insurer about the restrictions it has in place.
What if the term runs out and I’m still alive?
If, at the end of your policy, you are alive and well, you won’t receive a payout (typically). The policy will either end and you’ll stop making payments, or you will decide to extend it for another ten years – or whatever term works for you.