Should the policy be written ‘in trust’?
Life insurance policies can also be written 'in trust'. This means the benefits can be paid direct to whoever you want to receive the payout without it becoming part of your estate. This is useful because your survivors receive the payout more quickly and it is not subject to inheritance tax.
How much life insurance do I need?
If you have a particular debt in mind that you think your family will need to cover if you are not around, then you should insure yourself for this amount. If it is a mortgage, you could consider mortgage protection insurance, which exists for this very purpose, as well as life insurance.
Otherwise, consider your family’s budget and future outgoings, as well as your current income when deciding how much might be sensible. You might want to factor in inflation as well. It is easy to forget how rising prices over time can have an impact on family income needs, but shopping bills, school fees, house prices and rent are all likely to rise in future, so your family may need more to live on.
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