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How long should I take out life insurance for?

If you decide to take out life insurance, there are a few things you need to consider, including the payout amount and who the beneficiaries are. Equally as important is the term length, which will dictate the period you are covered for. This ranges from a few years to the end of your life.

But what is the ideal term for life insurance? Do I need it for my whole life, or just few years?

When you work out how long you want a life insurance policy to run for, it’s important to establish why you're taking it out in the first place. Most people do so either to cover a specific financial obligation such as a mortgage, or provide money for their family in their absence. Whatever the reason, the term of your policy should reflect this. 

For example, if your mortgage term is 25 years, then you will want a life insurance policy that mirrors this. You may also choose to opt for reducing cover, which means that the cover provided will reduce in line with the amount you owe, meaning you are only covered for what you need.

If, on the other hand, your policy is there to provide for your children should something happen to you, then you might opt for a policy that will pay out until they leave home. Generally speaking, the premium will be higher for a longer term, so it’s always worth considering whether a shorter contract will work for you.

For those that want full peace of mind that whatever happens to them, their family will be taken care of, then full life cover might be the best option. 

It’s also important to note that some life insurance policies are flexible. If you need to make changes midway through a term, you may be able to do so. 

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If you have a family and financial responsibilities, you’ll likely want to take out a life insurance policy. A good life insurance policy can affordably provide you with peace of mind during your life and offer your survivors financial support after your death.But even if you’re familiar with the basic premise of life insurance—premiums paid monthly for a lump sum payment or income following your death—you may find the process of seeking out a specific policy daunting. There are a range of life insurance products available, covering different eventualities and offering different levels and types of payout. But if you’re not familiar with the lingo used by insurers, these differences can be opaque. At worst, you can find yourself sold - and now paying premiums for - a policy that doesn’t suit your needs.In general, the better informed about the insurance market you are, and the more policies you compare in your search, the more likely you are the find the right life insurance policy for your personal and financial needs.The following glossary of terms you might encounter in your life insurance search and the types of policies available can help demystify the process.