Term life versus savings-linked life
Term life pays a lump sum if you die or become disabled, and builds no savings. That is the right product to protect your family or cover a mortgage. Savings-linked life products mix insurance and investment and are far harder to compare.
How much cover you need
A practical rule: the outstanding mortgage plus three to five years of the household's net income. Insuring much more raises the premium without adding real security.
- Death: the basic cover in every policy.
- Absolute permanent disability: strongly recommended, adds little cost.
- Critical illness: pays part of the cover after a covered diagnosis.
Life insurance and your bank: your rights
The bank can require you to hold life cover linked to the mortgage, but it cannot force you to buy it from them or worsen your terms if you switch. You only need to keep the required sum insured and provide proof of the policy.
What determines your price
Age and health
The premium rises with every year: buying earlier is cheaper.
Sum insured
The price is almost proportional to the cover taken out.
Smoking
Being a smoker can double the premium versus a non-smoker.
Occupation and risky sports
Risky activities may mean a surcharge or exclusions.
