Life insurance - common questions

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Q. How much cover should I get?
A. Make sure you use a fact-finding process that gives you a chance to tell your adviser about you and your situation. Once this is done the answer should be pretty clear. So, it's not rocket science - your situation will determine the life insurance sum that's right for you. And it is important that you get the right amount - too little could mean the people you care about aren't taken care of, and too much could mean you're wasting money.

Q. Does life insurance have exclusions?
A. The main blanket exclusion you'll see is for suicide within a specified time following the start of the plan (usually 13 months). If you have an occupation or hobbies that are very risky, these might be excluded from your cover. To be sure about your plan check your policy document or ask your adviser.

Q. Should I get a ‘stepped’ or ‘level’ premium?
A. This will depend on your situation and how long you’re likely to need the insurance for (basically, if you need the insurance for the very long term, then a level premium will likely make a lot of sense). Get your Inform adviser to show you possible long term premiums for both options – you’ll pretty quickly see which is going to be the better choice.

Q. How much does it cost?
A. Your life insurance premium is based on things like your age, gender, your health, and the amount of cover you choose. Also, if you're a smoker you'll pay more.

Q. Should I get life insurance for my baby?
A. One rule of life insurance - get it only if the loss of the insured person would have a financial impact on the surviving family members.

Q. Will I need it throughout my whole life?
A. Almost certainly not. Revisit your insurance periodically or when your situation changes to be sure your need for the insurance still exists, and if it does, whether your level of cover is appropriate. For instance if you buy a house and your debt level increases you may need to up your levels of cover. Or if your debt levels go down, or you are no longer responsible for dependants your need for cover will probably decrease. So make sure you review things regularly with your adviser.

Q. Who really needs life insurance?
A. Since life insurance isn't for you (it's for the people who are financially dependant on you) it's only really important if your death is going to impact on someone else financially. Whether you want to clear debts, provide for family or take care of your funeral costs, life insurance is a way to make sure it happens.

Q. Should I get "Whole of Life" or "Term" life insurance?
A. We'd say almost without exception to go for Term life insurance. Insurance (like Whole of Life) that includes an investment component is usually much more expensive - and there are better places to invest. Keep your insurance and your investments separate. Both insurance and investment decisions are too important to be clumped together - they require their own considerations and planning.


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