Death planning guide: life insurance

Money Savings Expert Martin Lewis has compiled a checklist of 20 things you need to consider when planning for the financial well-being of your family (it’s on his website). The check-list includes tips on wills, inheritance tax, funerals and setting up power of attorney.  Our last post addressed planning care for your pets. This post looks at life insurance.

If you're older and reading this, life insurance is likely to be very expensive - plus your kids may be past the age of relying on you anyway. If you're younger, life insurance is well worth considering if you've got kids.

Level term life assurance is one of the cheapest ways to protect your family's income if you die, because it will pay a fixed amount to your dependants. The two key words are:

  • Term: This means you only get a payout if you die within a fixed term, eg, 18 years.
  • Level: This means the payout you get is always at a set amount. So level term assurance guarantees a lump sum payout upon death within a fixed time, for example, £150,000 if you die within the next 18 years.

Standard life insurance policies become more expensive the older you are, especially when you're over 60. They'll also take your medical history into account, so they can become prohibitive (though non-smokers in their 50s may still find them a good deal).

Of course, this is the one policy you hope won't pay out, but it's well worth looking into. See the MSE Life Insurance guide for full info and best buys.

Estate Planning and Probate