What You Need To Know About Life Insurance

Whole of Life vs Term-Based Life Insurance

Generally speaking, life insurance is term-based, meaning when a policy is taken out, you are covered for a specified length of time.

Premiums are paid each month during this set term and if you (the policyholder) die before the policy expires, a payout is issued to your beneficiaries.

Term-based life insurance comes in 2 common forms, level term and decreasing term.

Decreasing term life insurance – here the cover amount reduces over time, usually to mirror/cover a repayment mortgage balance.

Level term – here the cover amount remains fixed (or level) throughout the policy. Regardless of when you die, as long as it is during the term, the payout sum remains the same.

A less well-known option is whole of life insurance. This involves paying premiums for the rest of your life, however, when you die a payout is guaranteed for your loved ones.

As a result of a payout being guaranteed, whole of life premiums tend to be much more expensive for a similar level of cover.

Whole of life is a form of life assurance. In short, life assurance pays out when you die, whereas life insurance pays out if you die.

The obvious benefit of whole of life is that a payout is guaranteed. However, depending on your age when the policy starts and the age at which you die, it is possible to end up paying more in, than your beneficiaries will receive in the payout.

Despite the differences between whole of life and traditional life insurance, there are also some key similarities:

    • Medical information is required on application
    • Premiums must be kept up to ensure cover protection
    • The younger you are, the cheaper your premium
    • Smoking will impact the cost of your policy.

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How to get the cheapest monthly premiums

Upon expiration of term-based cover, you can either renew your policy or risk being uncovered. The renewal is likely to bring with it higher premiums, due to your increased age.

Whilst this may initially make a whole of life policy more appealing, it is important to realise premium payments here can also change over time.

Some whole of life policies come with reviewable premiums. This means that after a certain period, usually 10 years, the premium can be reviewed by the insurer and potentially increase.

This is the most common complaint made to the Financial Ombudsman with regards whole of life. Therefore, it is important to review premium terms and opt for an insurer who provides fixed premiums. These may be more expensive at first, but are normally more cost-effective in the long run.

Generally, if you are young and in good health a term-based life insurance will offer the most cost-effective cover. This protection could cover a mortgage, as well as meet future living costs, if the worst were to happen.

Usually, the policy term will run until the house is paid off and/or the children are financially independent.

As you age, you are more likely to benefit from whole of life insurance, especially if you are in good health, as the payout is guaranteed. You may want to cover funeral expenses (average funeral cost £4,078, and the total cost of dying is £8,905) or leave an inheritance.

If you are 50 or older, but in poor health, an over 50s plan is probably more suitable, as it will guarantee acceptance (aged 50 -85) and there are no medical questions.

So which policy to choose?

Choosing between term-based and whole of life cover will always be subjective, as no one can see how long they will live or what the future may hold. Therefore, it is important to consider all of the factors and make an informed decision.

Think about your age, your health, your available budget and what it is you want to protect.

Remember, the best way to ensure you get the right policy at the best price is to compare multiple quotes.

You could do this yourself online. Alternatively, you can use an FCA registered life insurance broker, like Reassured, who will find you the cheapest quotes and never charge a fee.

This is a collaborative guest post.

3 Ways I Plan On Making Extra Money This Month

I’ve mentioned before that I have some debt and am keen to get rid of it as soon as possible. I managed to wipe out two debts recently and decided to check in on one today that I hadn’t looked at in a while, steadfastly paying away the set payment that I do each month. When I looked, I was shocked to see there was only just over £500 to pay on it – I had thought I still had double that so it was a nice surprise.

I’ve actually got a payment due out on the 15th – as this is this weekend, it will go out on Monday the 16th – which will take me to just over £400. Now this is at such a low amount, I am keen to get it paid off asap so I am trying to get some extra money together to pay it off this month if I can. But how do I plan on doing this?

I don’t think I can do anymore work than what I am – and realistically I’d like to keep that money aside for bills. Here’s how I will be doing it this month.

Online Surveys

I do a few different online survey sites. I used to do a lot more but now have a select few which are more worthwhile for me – you can read about them here. Any cashouts made this month will be going straight towards this payment.

Artem Bali
Trying To Win Some

You know how much I love competitions so I’ll definitely be entering all the competitions with cash prizes a go. Yes, I may be unlikely to win but I definitely can’t win if I don’t enter so I may as well give it a go. Any wins would go straight towards this debt. I also keep a little bit of money in an online account for betting on certain sports – I know gambling isn’t for everyone and I am by no means recommending it but Steve and I often put £1 here or there on the current golf competition that’s running. If we were lucky enough to win big, then I’d be certain to withdraw and pay it off. There are guides for online gambling out there for those who want to learn more but never bet more than you can afford. I choose to place bets as a personal choice and know my limits.

Declutter, Declutter, Declutter

I am always decluttering and putting stuff up for sale. I need to go through my items again – I’ve got a few things listed on eBay so want to refresh my listings and put some more stuff up on the Facebook selling groups. I’ve got a few big items that could potentially wipe out this debt so I really should get my finger out and list them.

Jack’s also keen to sell some of his old toys to make some money for his money account so why not kill two birds with one stone and list them all together?

These are a few ways I hope to make some extra money. If there is the opportunity to make some extra cash through some more work this month though, I’m definitely not going to pass it up! Do you have any plans to make any extra money this month?

Collaborative Post 

Getting The Best Deals For My Family

I’m always looking for good deals when it comes to my family. I take advantage of apps for services I use that offer me good deals, I look out for good deals in the supermarket and I look on websites to find some good family deals.

With half term coming up, I’m trying to collate a list of things to do that won’t cost the earth. How am I doing this and keeping things affordable? By looking for decent deals, of course! Whether it is for a day out, a short break away or a meal with the family, I know that if I look hard enough I will find a deal for something we are interested in.

Just by a little bit of searching in the past five minutes, I have found a great half price family ticket deal for an adventure park that Jack is interested in and also some massive savings on one of those big supersized paddling pools – perfect for this heatwave that we apparently should be expecting!

Jonathan Brinkhorst

Olivia has recently developed an obsession with Peppa Pig too so I have been looking for some items with Peppa on without having to fork out a lot for it all. As they say if you look after the pennies, the pounds look after themselves and I am keen to keep on saving money where I can. Brands and companies make things so expensive when you have kids, unnecessarily expensive in some cases so why shouldn’t I take advantage of a good deal if I see one?

Being a parent is expensive enough as it is. I don’t want my kids to miss out but I equally don’t want to spoil them by spending lots of money on them when I don’t need to. Does it matter if I got that item a little bit cheaper? Not to anyone else but me – it has saved me those extra pennies that I can put towards something else or perhaps even in the kids moneyboxes.

So this is what I will be doing in the lead up to half term – looking for some fun almost free things to do with the kids! What have you got planned?

Collaboration

Some Ways To Make Your Personal Budget Go Further

Everybody should have a budget for their personal finances. It’s important to keep your money organised so as to ensure that you cover the essential costs in life. Of course, you might still struggle to cover the many bills and other costs you face even with an organised budget. Life is expensive. Maybe it’s time to rethink your necessary expenditures. There are definitely ways to make your personal budget go further if you get creative with your money. Here are just a few ideas to get you on the right track.

Volkan Olmez
Reduce your household expenses.

If you want to make your budget go further then you should reduce your household expenses. You should take a look at your energy usage. Most people find that they can save astronomical amounts of money by conserving energy more effectively. You could get thicker glazing for your windows to trap heat in the house. If your home is naturally insulated then you won’t need to generate so much heat to keep it warm; in turn, you’ll notice a big reduction in your monthly energy bill. You could also save money by checking out cashback sites such as Moneypug for better deals on your energy. It’s important to pursue all available options to keep your bills low whilst still using the power you need.

Essentially, you can really minimise your household expenditures by taking another look at your bills. If your house has massively increased in value recently (maybe you’ve done some renovation work on it) then you might even want to consider remortgaging to save some money. Of course, you’ll need to check that you’d actually be paying lower rates. The point is that you could reduce the amount of money you spend on your home if you just reconsidered some of your existing costs. It could make your monthly budget stretch much further.

Reduce your car expenses.

You probably spend a lot of money on your car every month. You should aim to reduce your car-related expenses if you want to make your overall personal budget go further. Make sure you maintain your vehicle regularly so as to avoid it breaking down and leading to a costly repair job. You should check the oil and air filters regularly as well as washing your car to keep it from rusting. In terms of your actual driving, you should avoid speeding and accelerate smoothly to avoid wasting fuel. The less aggressively you drive, the further your fuel will take you. Put your money to better use.

Reduce your non-essential expenses.

We’ve talked a lot about saving money on the necessities in life, but you probably don’t want to completely give up on luxuries. After all, you should allow yourself occasional treats for the sake of your happiness. The key is to simply reduce your non-essential expenses. For example, you could save money on clothes by shopping at charity shops instead of expensive designer stores. You can often find high-quality luxury items for better prices if you look in alternative places. Sites such as eBay often list good-as-new items for a fraction of the price.

Collaboration

How You Could Save Money By Remortgaging

Collaborative Post

As someone who is yet to own a house, you would think that I probably didn’t know much about mortgages or any of the terms around it but in fact you would be wrong. In the past few years, multiple family members and friends have bought or sold properties, some even remortgaged. We have even applied for a mortgage in the past – let down by Steve’s credit rating and now will be applying again in the not too distant future hopefully – fingers crossed!

I wanted to talk about how you can save yourself some money by remortgaging. Now remortgaging isn’t for everyone, let me say that first off. Remortgaging can come under two umbrellas – it is essentially taking out a new mortgage on a property you already own but it is either a) to replace your existing mortgage or b) to borrow money against your property. Now quite clearly b wouldn’t be saving you money in the long run as you’ll still be paying it as you’ve borrowed against it so I wanted to talk about why you would want to remortgage and replace your existing mortgage.

Did you know that around a third of all home loans made in the UK are actually remortgages? I bet you would never have considered that so many of them would be! So why should you consider it and how can you save money by remortgaging? I’ve been looking at an online mortgage adviser, Habito, to see how remortgaging could work for some people.

Annie Spratt

Most people find that their mortgage is their biggest financial commitment/monthly bill. If you could make that debt smaller, you’d take that chance, right? So why should you consider potentially remortgaging?

Has your home increased in value?

If your home has increased in value exponentially, then remortgaging maybe something you want to consider. You may find that you aren’t but you may also find you’re in a lower loan-to-value band and therefore could be paying much lower rates.

Is your current deal about to end?

Some mortgages that seem great are only short term deals and you’ll find that once that deal ends, you will be paying a lot staying in that same mortgage. Many of the best ones only last from two to five years and you don’t want to be put onto the variable rate. It is bound to be higher than your previous rate and much less affordable than a remortgage to a cheaper rate.

You want to pay off your mortgage as soon as you can

Why would I suggest remortgaging if you want to pay it off quicker? Simply put, some mortgage providers won’t allow overpayments and if getting that mortgage out of the way is important to you, it may be worth remortgaging to a different one. You should be able to reduce the loan size this way and get a cheaper rate too – it is important to keep an eye out for early repayment charges though and factor these into your sums before making the leap. Also think about potential exit fees – this is something you also need to account for.

You want to change the type

Many people start on an interest only and want to switch to a repayment mortgage. Most lenders will be happy to move you across but if not, then remortgaging may be an option for you. Interest only mortgages work out much more expensive in the long run so why wouldn’t you want to make the switch?

Here are just a few ways you can save money by remortgaging – but remember, it is entirely up to you. It isn’t for everyone and I wouldn’t suggest doing it unless you feel absolutely sure it will work for you and your family. Is this something you have ever considered?