Why Get Term Life Insurance
If you have a family who depends on you for their basic needs, you need life insurance.
The Need for Term Life Insurance
- Only a few have life insurance. Only 26% of Londoners have life insurance. Over 90% feel they do not have adequate protection.
- The potential loss of a breadwinner can spell disaster for the family. 70% of UK families depend on a breadwinner for the family’s income.
- Welfare cuts have affected family income. Although 21% of UK families depend on benefits as a source of income, divorced, separated or widowed parents have fallen from 41% (Aug 2012) to 34% (Jan 2013).
- The mortgage comprises a bulk of the family’s debt. The average mortgage amount is at £107,820.
- Debt is increasing. The typical UK family owes £11,101 in unsecured lending (i.e. credit cards, personal loans).
Source: The Aviva Family Finances Report (January 2013)
Life insurance is a safety net that protects your family from the financial devastation that follows your untimely death. With the loss of an earning parent, the family’s income will decrease drastically. The family risks the home to a foreclosure, and the surviving spouse is left grappling with providing for the family’s needs. Life insurance comes in to replace the lost income that follows with the untimely death of the breadwinner or the cost of hiring someone to perform the domestic duties of a non-working parent.
However, the surprising fact is that 74% of UK families don’t have life insurance and don’t think that they will get one in the near future because of the family’s budget is tight. For comparison 88.3% of the population don't have private medical insurance.
Then comes the solution: term life insurance!
This cover allows people (especially the young and the healthy) to get coverage at highly affordable prices. Fill the form on the right to get your tailor-made term life insurance quote.
What is term life insurance?
Term life insurance is perhaps the most simple of life insurance products. Essentially, you buy cover for a specified number of years. If you die within this period, your beneficiaries will receive the proceeds of the life insurance. If you die after the coverage period, there are no insurance proceeds to be had. When the coverage expires, you have the option to renew the policy (buy more years of coverage) or terminate the policy (there will no longer be any insurance coverage provided by this particular policy). You can also combine life with critical illness insurance to get covered in case you get seriously ill.
Term life insurance is temporary coverage. This type of product is considered temporary – as it only provides coverage for a specified number of years.
Term life insurance is a no cash value policy. There is no cash value that accumulates during the life of the policy. This means that once the policy expires, you will not get anything from the policy. The premiums you pay are strictly for the coverage within the policy period. Also, if you are not able to pay your premiums within the life of the policy, the policy will simply lapse since there are no cash values that can be used to pay for the policy.
Term life insurance is cheaper coverage. Precisely because of the two reasons above, term life cover is cheaper as compared to permanent or cash value insurance policies. It is important to note, however, premiums may be subject to review regularly and that premiums may increase due to changes in age, health condition and other factors. This means that as you age, the premiums will be more expensive. You can also opt for level term life insurance, which will guarantee the same premiums for the entire life of the policy. However, if you opt to renew or extend the coverage, the insurance company will underwrite the policy and may or may not change the premiums.
Term Life Insurance vs. Life insurance with Cash in Value
Life insurance is more affordable as compared to life insurance products that have cash in value. Those with cash in value allow the Insured with the opportunity to get life insurance coverage as well as “save up” for a future event. At a pre-determined period, the Insured can get a certain amount (usually the same as the life insurance coverage).
The cash in value (as it accrues over time) may also be used to pay for the premiums in the event that the Insured is no longer able to pay for them. The cash in value can also be withdrawn or borrowed against. Although life insurance policies with cash in value are the ideal, the reality of a limited budget prevents a lot of families from getting the life insurance coverage they need. This makes term life insurance the next alternative.
Who should get term life cover?
Some important questions to ask regarding term life insurance:
- How much does term life insurance cost?
- What riders can I include in my term life insurance policy?
- How much life insurance do I need?
- Those who need to cover a debt.
Those who have a mortgage can consider getting term life insurance so that loved ones will have the means to pay off the debt even with the loss of the household’s breadwinner.
- Those who are recently married or who have young children.
A young family that’s just starting out usually has a higher level of debt (a mortgage just taken out, still paying off college loans, working at a lower level position). Savings may also be small (or even non-existent). This means that a family is left vulnerable at the death of a bread winner. Term life cover offers affordable protection for the young family. You can program the coverage so that it only provides cover while the children are dependents. Once they have become financially independent, your insurance needs may decrease.
- Those who want insurance but want to invest more aggressively.
Term life insurance, because it does not accrue any cash values, is considered a non-investment life insurance. But since it is cheaper, there are some who subscribe to the idea of “buy term, invest the difference”. The notion is that although insurance provides reasonable returns, there are still other investment options out there that provide higher returns. Thus, for someone who wants life insurance coverage but still have the freedom to invest his money the way he wants to, term life insurance is ideal.
Other situations where Term Life insurance protection is needed include:
- Getting a divorce or having a civil union dissolved
- Becoming self employed or beginning a new career
- Returning to work after a long break
- Getting promoted or moving to a new, higher-paying job
Why get term life insurance quotes?
Now that you know that term life insurance is important, the question is: how can you get your term life insurance policy? This is where we can help. We provide Term Life Insurance quotes from the leading insurers in the UK so you can shop around and compare the various term life offerings and choose one according to your needs and budget.
What if I outlive the policy?
One of the things that stop people from getting a term life policy is the thought that if one outlived the policy, then he would get nothing. However, even with this possibility, it is still money well-spent since you were able to get adequate cover during the time you needed it most. Also, you can get a term life insurance policy with a conversion option. This allows you to convert a term life insurance policy into a whole life policy at a time when you are more financially stable and are able to afford the higher premiums of a life insurance policy with cash value. Read more about convertible term life policies.
You can also look into adding a Return of Premium life insurance rider in your policy. This allows you to get a refund on the premiums you paid (or at least a portion of it) when the policy terminates and you have made no life insurance claims on the policy. Learn more about the return of premium benefit.