How Long Should Your Term Life Insurance Last?
Term life insurance is the most common type of life insurance - it's fairly easy to obtain and inexpensive. Over 150 companies in the UK offer some type of term life insurance, making it important to shop around and compare products. Term life insurance is inexpensive as many policyholders will probably outlive the term of the policy. This means less financial risk for the insurance company - and lower premiums for the customer. For many people, it can be the only type of life insurance they will need. Term life policies are generally either renewable or non-renewable - a renewable policy allows the policy to be renewed without taking health exams; a non-renewable policy requires the insured to reapply and re-qualify regularly.
When it comes to choosing term life insurance, the length of the policy will be one of your biggest considerations. Term life insurance is particularly flexible as it offers you the chance to choose the level of cover, as well as the length of the term - anything from one to thirty years or longer. In the UK, the average length of a life insurance policy is fifteen years. From a cost point of view alone, a shorter term is generally less expensive - many people choose a five or ten year term. The insurance company is less likely to have to pay out on a short term policy - hence the lower cost.
A term life insurance policy can cost from as little as 1 pound a day, although typically a policy will cost from between £8 and £20 per week, depending on your situation. It is particularly advantageous for short term needs such as covering the length of a mortgage or paying for your children's higher education. For example, if you have a thirty year mortgage, a term of at least thirty years is a good idea - this ensures that your payments are protected throughout the course of the mortgage. Take into account your age when you take out term life insurance. A longer term such as twenty years may be more appropriate if you are in your 20s or 30s, whereas a shorter term such as ten years if you are close to retirement age. If you smoke - and are trying to give it up - a shorter term is a better option. Term life insurance is also cheaper if taken out when you are young and in better health. It can be more difficult and more expensive to obtain if you wait until you are in your 50s or 60s. Most older people have more health problems and may also have pre-existing medical conditions. Term life insurance is also a little bit more expensive for men than women, as women have higher life expectancy.
In the UK today, life expectancy is higher than it has ever been, according to the Office for National Statistics (ONS) - around 77 for men and 81 for women. If you have been considering getting term life insurance, don't delay any longer. It's affordable and easy to obtain - and given that the average cost of a funeral in the UK is now around £1300, it's a necessity for most of us.
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