Life insurance cover for first time buyers

Hopefully you are happy and healthy as you read this. No one wants to think about the worst happening – but it’s always good to plan for the unexpected. Making sure that your family and loved ones are taken care of gives you peace of mind and a sense of security.

Buying life insurance may be a little overwhelming – especially if you are a first-time buyer. To help you sort out your priorities, here are a few tips to keep in mind.

Know the basics of life insurance

Let’s take a look at two of the most basic life insurance types: term life and whole life.

A term life policy provides the simplest form of insurance at the lowest cost for a fixed period of time. There’s no cash value. However, the full sum assured is payable upon a valid death, disability or critical illness claim. The premiums also generally increase with age. This form of policy is suitable for basic coverage at a low cost. A typical example will be child policies, to cover their children until they reach financial independence.

Whole life policy, on the other hand, covers you for the whole of life, until you pass on. Whole life policies differ from term policies because it includes a cash value earned from what is known as a “participating fund”. This means that the cash value increases over time, and either increases your sum assured, or in cases, grants you benefits in the form of maturity bonuses. The premiums are generally fixed at the age of entry, hence the earlier the policy is bought, the lower the premiums.

Calculate your needs

The next thing to consider is the amount of coverage you need. Online calculators like the dependent protection and liability calculator can help you calculate how much your dependents – whether children or adults – need. These calculators are a good way to give you an estimated figure. But the best way to figure out how much coverage you actually need is to sit down with a financial consultant. They will assess your needs based on your financial goals and circumstances.

Budget wisely

If your budget is fairly flexible, consider the range of options available, from lower-cost term policies to whole life policies that offer more benefits in the long run. Talk to your financial advisor to find out what best suits your needs.

Ask why you’re getting insured

At the end of the day, different people have different needs.

Perhaps it is wise to sit down and figure out what’s really important to you. Do you want it to pay off the mortgage, your child’s education or fund your retirement? After all, a life insurance policy is a big investment, so talking to a financial consultant and figuring out what you need is more important than anything else.