Shopping for life insurance: what to look for
When it comes to insurance we all like to look for the best deal. But plump for the cheapest life insurance or critical illness cover without looking at the detail, you could end up paying more.
That’s because the cover may not include certain conditions and features, meaning that when you need to rely on it it’s actually worthless. Here are a few things to ask so you can be clued-up when you shop.
Is the insurance company likely to pay out?
It’s a simple question and simple enough to find the answer to: by checking a few providers’ claims statistics, you can see what percentage of death and illness claims they’ve paid. Our advice? Go for a provider with a good claims rate over a number of years.
What illnesses are covered?
If you suffer from a serious illness you might take it for granted that your critical illness policy will pay out. But the conditions covered – and the definitions – can vary a great deal and very few of us understand medical terminology. You can choose a provider that covers a large number of conditions, but it’s worth getting some expert advice to help you understand exactly what’s covered.
Are your children DEFINITELY covered?
The implications of a child becoming ill can be serious financially, especially if you or your partner need to give up work to look after them. So it’s vital to check your critical illness policy for conditions such as your child having to be a minimum age, or in full-time education. The good news is there are providers with a ‘no-quibble’ approach, who’ll cover children from birth to age 21.
Could your family end up in debt to the taxman?
Many people take out life insurance so that the pay-out can help their family pay the inheritance tax bill that’s due when they die. But there’s a catch: probate can take a long time meaning your family may have to pay the taxman before they receive the proceeds of the policy (or their share of your estate). If the bill is large they could even be forced to sell their home to raise the cash. Placing the policy in a trust removes it from your estate and therefore the probate process. So look for a provider that offers a range of trusts or that will pay out before probate is settled.
What else do you get for your money?
There’s no doubt that financial security is important when a family is shaken by death or illness, but some policies offer invaluable extra services at no additional cost, like a qualified nurse to support , you, answer questions and arrange a second medical opinion. They could be worth their weight in gold.
Will it still suit you further down the line?
We’re all guilty of not reviewing things as often as we should. So it’s worth looking for a policy that will allow some flexibility in the future; for example, letting you increase or extend the cover if your children are reliant on you for longer than expected (who knew they needed TWO masters degrees?!)
A financial adviser can help you find the best life insurance and critical illness cover based on affordability AND quality. You may discover that (as with most things) you get what you pay for.
If you’re ready to find a financial adviser, you can locate one by using our ‘find an adviser’ tool.
Alternatively, visit our Advice Matters section to learn how financial advice can help you reach your goals.