What is Life insurance?๐Ÿ’Œ

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Life insurance is insurance we get which pays a lump sum to our beneficiaries upon our death.

Why do you need life insurance?๐Ÿ‘€

Life insurance will help cover costs which you might have taken care of when you were alive such as your mortgage. School fees etc

Life insurance gives you financial stability and assurance.

The key components of your life insurance will be:

Yourself ( the policy holder)โœ”

The insured amount( the amount your beneficiaries will receive upon your death)โœ”

Your beneficiaries( those who will receive the lump sum payment upon your death)โœ”

Your monthly premium ( the amount you pay per month)โœ”

The term( how long the insurance lasts for)โœ”

Types of Life insurance๐Ÿ’Œ

Level term insurance

With this insurance you pick the insured sum and the term and your monthly premium stays the same. If you don’t claim on your insurance during the term it will simply expire.

Critical illness insurance

This insurance pays you a large lump sum if you are diagnosed with a critical illness.

Mortgage protection insurance

Mortgage protection insurance covers some of your monthly mortgage repayment if you can’t due to accident or illness preventing you from working.

Income protection insurance

This insurance provides you a regular income if you are unable to work due to getting ill or an accident. The regular income payments will cease as soon as you are able to work.

Annuity vs Life insurance๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆ๐Ÿคทโ€โ™‚๏ธ

An annuity is very similar to life insurance. The main difference is annuity provides you a regular payment upon your retirement while a standard life insurance provides your beneficiaries a lump sum upon your death.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity โ€œStep Changeโ€ if you are in debt and need help.