Life assurance provides a guaranteed lump sum in the event of death or terminal illness.
Life assurance can be for a specific term, to match your mortgage repayment term or it can cover you for the whole of your life.
Whole of life insurance is very popular because there is guarantee that when you die the sum assured is paid out to your family.
Nearly half of people with mortgages do not have life cover – a worrying statistic considering that in the event of death the mortgage provider would expect the house to be sold and the debt to repaid and during this time the mortgage payment would need to be maintained by the surviving family members.
Most lenders make it a condition of the mortgage offer that suitable life assurance is maintained until the mortgage debt is repaid.
Does everyone need life assurance?
Not everyone needs life assurance of course. It is highly recommended for families and people who are mortgage holders. It would be hard to justify life assurance for a single person with no mortgage or dependents but Critical Illness insurance should be considered.
Life assurance should be reviewed regularly because life assurance rates change all the time. A policy holder may have been a smoker at inception of the plan but has now smoke free for over 12 months, a review of this policy would save you money or provide your family with more cover.