By the time we were born, the human race had landed on the moon and George Lucas was telling us of a galaxy far, far away.
Fast-forward forty years and the stars have lost their allure, but many of us focus on rays of sunshine closer to home. We are in our own space race to accommodate our children and when they fly the nest, we continue to wonder what will become of them when we are no longer around.
It’s not just our children, but nieces and nephews, siblings and partners. Providing for loved ones is a high priority. So why do so many of us lack the life cover we need? If there is one thing we all need to get right in our forties, it’s choosing the best provision for our own future and those that we leave behind.
Life Cover or Pension for over 45s
There is no doubt that you should have at least one pension scheme in place and growing nicely in your forties. As the saying goes, failing to plan is planning to fail.
So, pensions are most important, right? Not necessarily and here’s why:
Pensions – Designed to provide a regular income for you and your family when you retire.
Life Cover – A lump sum paid upon your death.
If you are comfortably in the black, mortgage free and with cash or assets that can provide for your family for long after you pass away then, life cover may not be a priority. If that is the case, then you may also need to be aware of your tax-free thresholds for any pension scheme to which you or your employer contributes on your behalf.
The Other 98% Need Life Cover
If, like most people, you have a mortgage and want to ensure your family are financially secure when you die, then you need some kind of life cover.
There are two forms of life cover:
1. Life Insurance
2. Life Assurance
The two forms of cover will both provide a lump sum for your family in the unfortunate event of your death. The key difference is simple.
Life insurance is a fixed term policy that you pay into until the policy ends.
If you are in your forties with young children, then this may be an attractive option because it will provide financial security for your family. Cover is usually available for policies up to 25 years, which should mean your children are financially independent at the end of the policy term and would no longer need the safety net that life insurance provides.
Unlike life insurance, life assurance is a whole of life policy.
This is kind of policy requires payment for the remainder of your adult life for most policies, with some exceptions allowing payments to stop if you reach an advanced age. Unlike life insurance, life assurance providers can link your payments to an endowment and as such is an investment.
Life assurance will offer a guaranteed minimum payout, but payouts from any linked investment may vary based on its performance. Some people receive less than they pay in over the lifetime of the policy.
The most important thing for you to do right now
The answer depends on your individual circumstances, but I would suggest speaking to a qualified advisor who can review your needs and make suitable recommendations.
Give us a call on 0800 862 0373 or get a selection of life insurance quotes here.
© ActiveQuote Ltd. 2017