An unexpected demise of a loved one is one of the most devastating experiences anyone can endure. It’s such a difficult moment that many families avoid discussing it altogether. Unfortunately, a lack of preparation may cause even more pain when the inevitable happens.
Good news is you can protect your family by taking out life insurance cover to provide your loved ones the much-needed financial cushion once you depart.
The following are three key steps to take to safeguard the future of your family using a life plan.
Think about your family-specific needs
The market is flooded with numerous types of life insurance policies that serve diverse needs. You can choose to take out one or combine several plans to cover various risks in your life. Below are a few policies for families as well as the circumstances they serve best:
Level term life insurance
As the name implies, this policy covers you for a specific period, usually 10, 20, or 30 years. If you pass away within the term, your loved ones receive a one-off lump sum payout. This makes it best suited for people who may have financial needs that last for a given period. For example, you may take it out for short-term expenses like funeral and other final costs. Or you could use it as cover for long-term expenses like university fees and paying off a mortgage.
Family income benefit
This is a life insurance policy that promises to financially support your dependents in form of monthly instalment payouts if you pass within the contract period. Family income benefit could be a great fit if you’re the sole breadwinner in your family. This means your loved ones would struggle financially if you were to pass away.
Picture this; you fall ill or get injured and are unable to work for an extended period. Would your family cope financially? If your answer is NO, it’s a sign you need income protection cover.
This policy offers to cover part of your salary (usually 50-70% depending on your insurer) for the period within which you’re unable to work and generate income. Your family could use the policy’s benefits to continue paying bills and live comfortably as you recover.
Critical illness cover
If you ever get diagnosed with a critical illness, this policy offers to provide the much-needed financial support during the treatment and recovery period. You could use the proceeds to afford household bills and extra childcare. Some critical illness policies allow you to include your children, keeping them protected in case they get diagnosed with a serious condition.
Decide how much coverage you need
Although most insurance companies usually recommend you take out a policy worth 10 to15 times your annual income, the final decision remains with you at the end of the day. And it largely depends on how much financial support your dependents will need upon your demise.
For example, if you’re a stay-at-home parent, you may need to have enough insurance for your surviving partner to afford full-time childcare once you’re gone. Likewise, if you have outstanding debts like car loans, student loans, mortgages, or credit cards, you should get enough coverage to pay them off in full.
If you’re unsure how much insurance you need, you can always talk to a reliable financial advisor like Caspian Insurance for personalised assistance.
Choose a reliable insurance provider
When you’re in the market for an insurer, you need to be keen about the company you choose to work with. Ideally, you want to compare and conduct thorough background checks on several companies before settling for the most suitable one.
A reliable insurance provider should have:
- Excellent reputation. Check out what actual customers are saying about the company on online platforms and social media.
- Solid financial ratings
- Grade-A customer support services
- Competitive prices
You should also ensure that you are comfortable with them during the application process. If you’re purchasing your life insurance policy through an agent or broker, confirm that they belong to a credible professional organisation. Also, be sure to check out their reviews and testimonials from previous clients.
Safeguarding the future of your family with life insurance starts with defining your family-specific needs/circumstances, deciding the amount of coverage you need, and choosing a trustworthy insurer after in-depth research. Follow these steps and you’ll hardly go wrong with your life plan.