No Christmas is complete without a screening of It’s A Wonderful Life. The 1946 film is considered one of the greatest films of all time and recognised by the American Film Institute as topping its list as the most inspirational American film of all time.
The film stars James Stewart as George Bailey, a man who has given up his personal dreams to help others in his community. His very ordinary life is saved by the intervention of his guardian angel – who shows how he, George, has touched the lives of others and how different life would be for his wife Mary and his community of Bedford Falls if he had not been there to provide for them.
The film has been criticised for its sentimentality, but it cannot be described as anything other than life affirming. When its everyman hero George hits a financial crisis and despairs, he is given the chance to see what life would have been like if he had never been born, he realises he has touched the lives of his entire community, not to mention those of his own family.
It can also provide a reminder that in the real world, very few of us are actually alone. You probably have a partner, children, or other relatives who depend on you. It means you have a major responsibility and need life cover to help provide for them if you were no longer there to do it yourself.
What cover do you need?
You can tailor the cover you have to your needs. If you have a young family with a mortgage to pay off and an income to replace, you will need a large payout – and the policy you pay will inevitably be higher than someone who simply wants to ensure their partner can have money coming in to supplement a pension.
Getting the right scale of cover is important and so is getting the right kind.
Life insurance, or term insurance is simply designed to ensure that your dependents will be looked after if you’re no longer there to provide for them yourself. Most term life insurance policies are taken out for a set period.
If the policyholder should die, the insurance provider pays their dependents an agreed lump sum, but there’s no lump sum at the end of the policy term.
Remember, the cost of any kind of life cover will vary with factors including age, health and occupation. The younger you are when you take out cover, the less it can cost to get the protection your loved ones need.
One type known as ‘whole-of-life cover’ is designed to last for the rest of your life. The monthly premiums are relatively high because insurers know that they’ll have to pay out eventually. Some plans keep you paying until you die, but others have a cut-off point – often around 85 or 90 years of age – after which your cover continues but you no longer need to pay.
As well as paying a fixed lump sum, some whole-of-life policies are investment focused. With this type of life assurance, your insurer invests your monthly premiums and your eventual pay-out depends on how well the investments perform.
A life assurance policy can be written in trust, which means that it falls outside of your estate, making it ideal to help dependents pay off inheritance tax. This is becoming a major reason for buying life assurance – although expert advice is vital to make this an effective way to avoid ‘death duties’.
Why you need to review your cover
There are many variations on life cover. You can choose cover that goes down, or up. You can have joint cover for yourself and your partner. You can even combine life cover with other types of protections, such as accident cover, critical illness cover, and income protection.
You also need value for money. At Continuum we can help you find the cover you need and pay less for having it. And remember, it really is a wonderful life.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation you should seek independent financial advice before embarking on any course of action.
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