Most people will (or at the very least SHOULD) have some life insurance, and bear in mind that this only pays out on death, whereas Income Protection Insurance (IPI) pays out if you cannot work, and pay-outs can go up to 2/3rds of normal income – so these are very good policies to have, but the only problem is, that people invariably never go for IPI – they go for straight life cover.
The whole purpose of insurance is to provide a lump sum (or an income) in the event of something happening, and that money should cover known liabilities or perhaps expected ones. Now for single people, it is my opinion that life insurance is almost a waste as it only pays out on death, whereas that person should be looking to take out Critical Illness insurance that would pay out on that person contracting a major illness. Income Protection Insurance is also valuable for a single person.
Couples should look to cover both parties and maybe slightly more for the higher earner. Now here life insurance is not a waste as the remaining spouse may very well have to face liabilities – and so will need some money to help with these. Family protection policies are also important if the main earner suddenly falls ill and dies. We normally recommend life cover of 4 times earnings, and that gives the family 4 years of peace of mind and give them a chance to get things organised in time.
The big contradiction in insurance is that most people – if they have insurance – it will be life insurance which in a lot of cases is wasted, whereas Income Protection Insurance which helps more people is least taken out.
This is where people need to sit down with their IFA who can guide them through the BEST type of insurance for them and also the right amount of cover as well. It would be a waste if you had the right policy but fell far short of what you need. AT MAP – we can tell you what the best policies are, and give you all the relevant prices, and then you decide what is affordable.
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