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Everyting you should know about family life insurance

Family life insurance

What is family life insurance?

life insurance of the family is an insurance policy that that you make in order to make sure that your family continues to have a financial support after you die.

the insurer which you deal with will pay tp your family after your death, with this money they can later pay a mortgage or pay a dept and cover the daily expenses of life and the children’s educational obligations.

what is family life insurance, what does a family life insurance policy offer

How does insurance policy work?

With this policy, you will have to pay to the insurer company a constant payments per month, this constant payment is agreed on in the contract, this policy will take care of your family in case something happens to you during the policy’s duration, this duration is called the term.

If something happened to you, god forbids, during this term like if you don’t pass away, you will have to pay to the insurance company a sum of the agreed money which was written in the contract. You will be paying either in one lump or in monthly instalments.

There are 3 main times of policy, 2 of them have fixed terms, usually for a 25 years period, while the second one is indefinite.

  •  Level- term life insurance: the insured sum is the same, the insurance is still active no matter you passed away during the policy.

  •  Decreasing-term life insurance: the pay-out decreases during the terms of the policy. This policy type is designed to cover long-term financial commitments such as the mortgages as the dependents, as the time goes on, will be having to pay lesser if you pass away.

  • Whole of life insurance: it is also can be called the life insurance, this policy’s type covers the whole life and it is guaranteed to pay out when you pass away, whole life insurance is the most expensive type of policies as you will be having to pay.

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Single or joint life insurance?

insurance of life can either be taken separately as an insurance of a single life policy or by a couple, in this type it is called a joint policy, there are prod and cons to each

- Single life insurance : 

This type of policy is suitable for single or couple parents, despite it covers only one person. All you will be doing is to name a beneficiary in the policy, and they will get their money received by the insurer when you die.

This type of policy could be used to cover the mortgage and the expenses of the children and the other day-to-day expenses.

You can write a policy in trust in order to name a different beneficiary for the payout of the policy, this beneficiary could be your partner or one of the family members or it even ca n be a child. Writing the family insurance in trust means that your payout will not charge you with an inheritance tax.

- Joint life insurance :

In this type of insurance, the two related persons will be covered by the same policy. It can end up cheaper than buying 2 separate single policies. This type of insurance covers the financial contributions of the people. This includes any costs related to any future childcare should 1 of the parents pass away and the other has to go to work.

This policy pays out one time, so the insured sum has to enough to cover at least the total outstanding mortgage amount. Adding any additional cover bills or expenses and any extra money which you want your family to cover.

If one of the 2 parents or couples passes away during the term of the policy, then the insured term will be paid to the other which can make the process of claiming much easier. If both of the partners pass away at the same time, then the money will be added to the estate, unless you have written the policy in trust.

How much does life insurance cost?

The average cost of the life insurance per month can vary in 2 ways. The joint policy is cheaper than the 2 single policies, meanwhile the premiums gradually increase as you get older

How much life insurance cover do you need?

The cover amount of the life insurance that you take out has to be enough to cover what is left to pay on the mortgage, you can then add an extra financial cover for the partner or another beneficiary. Your cover may also include:

  • Any bills and daily expenses. 
  • Any fees.
  • Any borrowed money or depts. 
  • Any money you paid in order to help your family if one of the partners couldn’t be there.