Why you need to organise your life insurance

What would happen to those closest to you financially if you died? If keeping up with the bills, mortgage and everything else could be a struggle, life insurance is a cost-effective solution which would provide a lump sum to clear any debts and give your family an income.

Good life cover plays a critical role in steering people through tough times, so that whatever else they have to worry about, your dependents won’t have to worry about money.

The golden rule is to be as flexible in shopping around for the best deal for your life insurance and seeing what different providers offer. You are not stuck with your old, expensive policy. Using comparison sites to compare life insurance quotes is a great way to find savings.

Traditionally, men have paid more for their life insurance than their female counterparts, given their statistically higher chances of dying before the end of the policy’s term.

However, under new EU law which comes into force before the end of the year, all that could change. Back in March 2011, the European court ruled that gender discrimination could not be a factor in deciding the price of insurance policies.

This means there’s a real chance that female costs could go up steeply once the new rules kick in on 21 December, with one broker predicting rises of up to a fifth.

Women are increasingly important breadwinners in their households, and so are more likely now than in previous generations to consider taking out life cover.

But you don’t have to be the main breadwinner to need life cover. Quite aside from the serious emotional stress involved, the death of a parent who stays at home to care for children can have a severe financial impact.
If the worst happens, either extra childcare would be needed or the surviving partner would have to take more time off work, and neither option is particularly cheap.

Of course, it’s impossible to say exactly how much or even whether women’s life insurance premiums will rise. What is a strong possibility, however, is that, as December gets nearer, new policies that females buy could increase in price. By taking out a policy before the change in the law takes effect, you are likely to get a cheaper premium. And the new rule isn’t the only reason to act swiftly. The longer you leave it in terms of your age, the more you are generally likely to have to pay for your life policy.

If you want to make things as cost-effective as possible, consider term life insurance rather than whole life cover. This could be for a set period of, say, 20 years, while you still have a mortgage.

But bear in mind that if you just go for a mortgage life insurance policy, this won’t give your family enough to live off or cover any other debts.

You can save money on your life insurance by being as fit and healthy as possible, and by making lifestyle choices like joining a gym or stopping smoking.