You might be too busy with what life is throwing at you right now to consider your family’s financial future. However, taking some time to consider what might happen next can be a huge help further down the line. The good news is that it doesn’t have to be stressful either. Here are some of the things you should consider when thinking about your family’s financial future.
When should you think about getting life insurance?
You may have heard of life insurance and could be thinking of taking the plunge. However, you may not be convinced that it’s the right time for you. This is fair enough, oftentimes people can feel like it’s not worth it for a variety of reasons. One of the principal ones could be ‘I’m healthy now, why would I consider life insurance?’. When thinking about life insurance it can help to look at some of the possible situations you could find yourself in. Here are just a few of the situations that could mean you might want to think about getting life insurance:
Getting a house
Without a doubt, one of the biggest milestones in a person’s life is getting their first home. From when you start thinking about it to when you actually move in can end up being a long road. When you finally do you’d like to think that you were protected in that home. Life can come at us fast and things can change quickly. Mortgage Life Insurance could be a great way to help your loved ones to continue living in the home even if you were to pass away. While there are some mortgage providers that don’t require life insurance in order to get one, it will keep your options open to the ones that do require a life insurance policy.
Children can bring a tremendous amount of pride and joy to our lives. Watching them grow up, learn to walk and talk is truly magical. Wanting to have the best possible protection for them is an instinct all parents share. Life insurance is one of the ways that you can provide for their future even if you’re not around.
Deciding to share your life with someone can mean a lot of changes. One of those changes can be sharing your finances with someone else. This can mean that if you decide together to get loans such as a mortgage if one of you was to pass away the other would be liable for those loans. Even if you haven’t got kids, a life insurance policy is a way you can make sure your partner is looked after.
Someone close to you passing away
Death can be one of the harshest reminders that we only have a finite time on earth. If someone close to you has passed away recently, it may have already started you thinking about death. It can also bring some of the practical considerations to the forefront of your mind.
These are some of the most common times that a person might start thinking about getting life insurance. Everyone’s situation is unique though and ultimately any time in your adult life can be a good time to consider life insurance.
What kind of life insurance policies are available?
At FRANKLi there are two life insurance policies that we offer to our customers. The FRANKLi Life Insurance policy and the FRANKLi Mortgage Life Insurance policy. While these policies might sound similar in their names, there are a few key differences you should be aware of.
Our mortgage life insurance policy is what’s known as a decreasing term policy. What this essentially means is the payout will decrease over time. The thinking behind this is to roughly reflect the decreases in any mortgage or large loan you could currently have. Your premiums will remain the same over the duration of the policy. If you were to pass away suddenly, it could potentially leave your family with a lot of debt to pay off. Having this financial protection in place can help their lives continue in the family home.
With FRANKLi Life insurance, you have two options - a level or increasing benefit policy. A level policy is where the benefit and premium will remain fixed over the duration of the policy. At the beginning of the policy, you choose how long you’d like it last and how much the payout amount would be if your family needed to claim it. As long as you continue to pay your monthly premiums your family will have some financial protection.
With an increasing benefit policy, the benefit (the payout) will go up each year in line with the Retail Prices Index (RPI). This annual increase is up to a maximum of 10%. This can help you offset the effects of inflation on the value of the payout of your policy. While this does sound great, it is important to make sure that you can pay the premium further down the line. If you choose this policy type your premium will increase at a rate of 1.4 x the benefit until the end of the term. You would still choose how long you’d like the policy to be and how much you would like to be insured for.
How will I know if I have enough life insurance cover in the future?
Considering the amount of cover you will need with life insurance is a hugely important step to take. Making considerations for what would be right for your family along with your ability to pay the premiums is vital. At FRANKLi we want to make this process as simple and straightforward as possible. That’s why we’ve got a calculator where you can look at the potential costs of your life insurance policy. Before you commit to signing on for any policy you can examine how much it could cost you per month. Once you have an approximate figure it’s important to look at your ability to pay it not only right now but a couple of years down the line.
There are other considerations to make such as what stage you are at in your life. Do you plan on getting a mortgage soon? Or are you planning on having kids? Look at these things as possible reasons to increase or decrease the amount of cover you might need in the future. You can find all you might need to know about calculating what kind of cover you need in our extensive guide.
However, it’s important to acknowledge that no one truly knows what could be around the corner. That’s why you’ll be glad to know that at FRANKLi we offer flexible policies. This means that you can easily apply to make changes to your policy. You can revisit your policy at any time and if you feel like you might need more or less cover, you can get in contact with us to apply to make these changes.
Why should you consider writing a Will?
After getting life insurance you would like to think that once you pass away, all of your belongings will go to exactly who you want. Unfortunately, this isn’t a guarantee. One way to make sure your estate is split up exactly how you want is by writing up a Will. A Will is a legal document that gives details on how exactly you would like your belongings split up in the event of your death.
If you decide to go with FRANKLi as your life insurance provider you will get a free legal Will kit. This means that while you are getting your life insurance sorted out, you can also decide exactly where your insurance payout will go if it is claimed.
What happens if you pass away without a Will?
There is no requirement to have a Will written in order to get life insurance. The reason why you might see a Will mentioned alongside life insurance is that a Will deals with what happens to a life insurance policy should you pass away.
If there are no explicit instructions, your loved ones have to try and guess what you would have wanted. It also means that a person’s possessions will be processed through a set of rules known as the rules of intestacy. With intestacy, these rules will decide how things are shared out, not the person who has passed away.
Through these rules an estate will be divided up in the following ways:
Married or Civil Partners
In order to receive part of the estate, a person will need to be a civil partner or married at the time of death. In the case of divorce, the person will not be legally entitled to anything. It’s important to remember that under an informal separation the partner may still receive part of the estate under the rules of intestacy.
If there are children and grandchildren of the person who has died, then the surviving partner will receive up to £270,000 of the estate, all of the personal belongings and property of the deceased person and half of everything after £270,000. If there are no surviving children or grandchildren the partner will receive everything.
If there is no surviving partner or civil partner the children of the deceased will inherit everything. In the case that there is a surviving partner then the children could only receive part of the estate. Children won’t receive their inheritance until they reach the age of 18 or are married under that age. Until they reach that point a trustee will manage this inheritance.
Other Close Relatives
There are situations where other close relatives such as parents, brothers, sisters, nieces or nephews could inherit under intestacy. This will depend on there being a surviving married or civil partner, children, grandchildren or great-grandchildren. It will also depend on the amount of the estate.
Who cannot inherit under the rules of intestacy?
There are situations where people would not be entitled to inherit. The following people would have no right to inherit under the rules of intestacy: unmarried partners (sometimes wrongly called 'common-law' partners), lesbian or gay partners not in a civil partnership, relations by marriage, close friends and carers.
Intestacy can be a complex process and it can add stress to an already emotional situation. While it can be a difficult thing to contemplate, getting a Will sorted out early can help to avoid these kinds of situations. We all have people we care about and would like to see looked after if something was to happen to us.
Consider your future sooner rather than later
If there’s one thing that we all know, it’s that we just don’t know what could be around the corner. You shouldn’t have to stress about the future though. Making a plan now can be simple and straightforward. At FRANKLi we are here to provide you with honest answers to all of your questions about the life insurance process. You can look forward to what the future might bring, confident that your family will be looked after.