One good place to start when looking for any form of financial service is to establish what you need the service for, as well as looking for good value and level of service from your broker. Looking for life insurance can be simplified even further. How much life insurance do you need and for what length of time? Answer these two questions first and you can then go about searching for the right price and policy.
The amount you will need depends on what you require covered. If, for example, it is a mortgage worth 120,000 then you will require 120,000 in cover so that in the event of your death your dependants will be able to settle the mortgage.
If you are looking for life insurance to cover your family in the event of your death then what you need to assess is the amount of money that your family would require after you had passed away or what would make them comfortable.
The best way to assess this is to take into account your annual income. Lets say that you annual income is 30,000. In the event of your death your family would therefore be 30,000 worse off. So what would be required would be 30,000 cover per annum.
This can be done one of two ways. The first way is you could take out life insurance cover called family income benefit. This type of life insurance is designed to pay out a set amount of money every year for a set amount of time. Say for example 25,000 on a 25 year term this would obviously pay out 25,000 every year for the balance of the 25 years after you die.
With this type of cover you can also include something called indexation. Indexation basically will increase the amount of benefit each year inline with the average earnings index as such your dependents will essentially get a pay rise each year same as you would had you been alive and continued to work.
The second option open to you is a lump sum life insurance plan. The difficulty posed with this type of policy is that you have to calculate how much of a lump sum you need to in order to guarantee your predetermined 35,000 payout per annum. This can prove problematic as you cannot predict how your money will be invested, nor can you know how much return it will give in the future. Therefore, with 35,000 being subtracted from an unknown amount every year, you cannot know how long it will last. The widely taken guideline is that you must factor in a minimum of 10 times the required amount, that is to say that 35,000 per annum requires a lump life insurance sum of 350,000.
Therefore if a set payout per annum is a big requirement you should definitely consider family income benefit. It is created to payout the same every year and takes a pro rata pay rise into account. It removes the fear of investing when you know that is your family's future that is at stake. You can rest easy with the peace of mind that your loved ones are adequately protected.
Therefore, to conclude, you need to estimate the amount of money your family would require each year and how many years they would require that amount for. The easiest way to make the process less daunting is to search through the appropriate internet websites were all the information is readily available. And these sites will contain contact numbers for advisers if there is anything that you are still unsure of.
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