Time to review your life insurance cover?

Life insurance may not be one of your favourite subjects, but you should still give it a serious amount of consideration. Most of us take on a huge amount of financial obligations in our lifetime, and should the worst happen we wouldn’t want to leave our loved ones without financial protection.

Buying a property and buying life insurance often go hand in hand. It is vital to ensure that your mortgage will still be paid off in the event of your death. If you die during the term of the mortgage your family will be paid a lump sum to settle the outstanding loan.

With mortgage protection life insurance, the amount of cover is often tied in with the outstanding repayments and decreases over the term of the policy. Whether you choose a decreasing term life insurance or a level term life insurance should depend entirely on your individual circumstances.

However, there are other good reasons why you might want to review your life cover from time to time, as making sure you have enough protection is essential if your personal circumstances change.

If you get married or have a child you will be relying even more on your income to pay the mortgage and household bills. In that case you will need enough life insurance to cover all the expenses if your income is lost.

Bringing up children is expensive; research by Legal & General reveals that over a period of 18 years parents will have to fork out on average ?123,000 on each child – a huge expense if one income is lost, so remember to adjust your life insurance accordingly if you have more children.

Legal & General estimates that the cost of running a home and caring for the children amounts to ?24,000 each year which is equivalent to the average UK salary and far more than most people expect. Unfortunately, most people also tend to forget about the homemaker when they are taking out life insurance. Therefore think ahead when buying life cover and insure the homemaker as well as the main income earner.

Apart from your mortgage you might also have taken on other loans, or you have outstanding credit card balances. If you have quite a lot of outstanding debt to pay, it might be worth insuring them as they can be taken into account when reviewing your mortgage protection life insurance. In the event of your death, you certainly don’t want to leave your family in debt, so this course of action could be a sensible precaution.

The same applies if you move on to a larger, more expensive property or increase your mortgage loan, so don’t forget to increase the amount of cover you already have, because a shortfall could cost your family dearly.

Even if you have had an increase in salary, or your employer has taken out a death in service policy for you, or you have other policies in place, always make sure that your life insurance cover is up-to-date and will be sufficient to pay for your mortgage, your debts, household expenses and the upbringing of your children should the worst happen.

Daniel Collins writes on a number of topics on behalf of a digital marketing agency and a variety of clients. As such, this article is to be considered a professional piece with business interests in mind.