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Five tips when buying life insurance
By Nathalie Bonney
Nobody likes to think about what would happen to their loved ones when they die, but if you want to ensure your dependants are looked after, taking out life insurance is often a must.
Here is Moneywise's five-minute guide to buying life insurance:
1. Look after yourself
According to Kevin Carr, director of protection development at PruProtect, the more unhealthy you are, the higher your premiums.
If you give up smoking for at least 12 months, this could also dramatically reduce the cost of your life insurance.
2. Start paying earlier
Remember to take inflation into account, as the real value of your payout will be reduced over time.
Protection specialist LifeSearch suggests considering taking out an index-linked policy, so that its value keeps track with inflation.
3. Take out separate policies
A joint policy only pays out after the first person dies - therefore two payouts would be more beneficial to couples with dependants.
4. Use a trust
If you are concerned that your estate might be subject to inheritance tax when you die, then consider putting your life insurance into a trust.
This will ensure the payout goes to the person, or people, you intend it to, rather than the taxman.
5. Be honest
Also, always give as much detail as possible, and get regular checkups with your GP to ensure that the details in your policy are up-to-date.
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