Life Insurance advice

June 26, 2013 at 12:50 pm Leave a comment

Whether or not to buy life insurance – and the kind of life insurance you need – is one of life’s big decisions. The different kinds of policies can seem like a minefield to the uninitiated which is why seeking out professional life insurance advice before making your move is a very good idea.

The good news is, sourcing advice about life insurance doesn’t need to be difficult. You can start by calling call centre on : (800) 503-6140 #223. Here one of our on-hand advisers will be happy to provide you with free, impartial advice with no obligation to buy. You can even request a call back at a time that’s convenient for you.

You may however, choose to carry out your some of your own research before seeking advice on life insurance. Here is the place to start.

Is life insurance for me?

The first thing you will need to establish is whether life insurance is the right product for you. To do this, you will need to take a close but detached look at your life.

If you have a partner, loved ones or dependants who rely on your salary, ask yourself what they would do if it suddenly stopped dead in its tracks? If they would not be able to cope financially, it’s time to consider life insurance advice, or start researching into your own coverage.

Life insurance – which can also be called life assurance – will pay an assigned beneficiary/beneficiaries a lump sum payment (which can also be taken as a series of smaller payments or even a monthly income) in the event of your unexpected death.

The money can be used for a variety of necessary things. For example, to pay off the mortgage, meet bills and day-to-day living costs, fund your children’s education and – while it sounds grim – even to cover the cost of your own funeral.

Whatever it pays for, the money will ensure that a situation that is already highly-traumatic for your loved ones is not exacerbated.

How much life insurance do I need?

Once you have established that you need life insurance cover, you will have to choose what the payout will be if you die. This is known as the sum assured. The level of cover you choose will depend on your own particular circumstances.  For example, whether you want it to cover just the mortgage or also use it to effectively leave an inheritance to dependants.

Seeking life insurance advice before deciding is a useful step – but don’t worry. If it transpires that the coverage you need is out of your price range in terms of monthly payments, there is nothing to stop you paying a smaller premium now and increasing it in the future.

How is my life insurance premium calculated?

So what will your premium cost? Rather morbidly, it will simply be calculated on the likelihood of you dying within the policy term.  This means that the older you are, the nearer you are to death in the eyes of the insurer and the higher your premium will be.

For example, statistically, life expectancy of women is greater than that of men so, like-for-like, premiums for females are lower. Your family’s medical history will also be a price factor and smokers will pay considerably more. Finally, price will vary according to your kind of policy and the level of cover in pounds that it offers.

Different types of policy

So what policies are available? Life insurance that offers protection-only is known as ‘term insurance’. This is the most straightforward variety although there are still several different kinds to get your head around.

Decreasing term life insurance

Decreasing term life insurance is when the sum assured – what is paid out when you die – is relative to the amount outstanding on your mortgage. So, as your debt to the mortgage lender decreases, so does the amount paid out by the insurer over the term, which is typically 25 years.

For example, if in year one, your outstanding mortgage is $200,000, this is the sum that would be paid out to your beneficiaries if you die. If, in year 24, the outstanding sum is $1,000, this is the sum that would be paid out if you die. Your monthly premiums however, remain the same, not a good deal for you, for the bank yes

Level term insurance

Level term life insurance is when the sum assured remains fixed for the term. If this was $200,000 for example, this is the sum that will be paid out in year one or year 24 of your mortgage. Level term cover will usually create a surplus of funds to your mortgage which is why the monthly premiums – which remain fixed over the term of the policy – are more expensive.

Whole of life insurance

Whole of life is an alternative to term insurance and, as its name promises, will pay out whenever you die. Given the fact this event is inevitable the cost of this insurance is high.

Whole of life policies are also more complex than term life insurance as they are linked to investments, which means premiums can go up to maintain just the same level of cover.

Especially with whole of life policies then, it’s worth seeking advice on life insurance before signing on the dotted line.

Do I need critical illness?

Once you have decided on the right policy as well as sum assured, you can opt to add on extras to the deal, for example, critical illness insurance.

Critical illness cover pays out if you contract one of a list of conditions, ranging from a heart attack to Parkinson’s disease, so long as it is severe enough to meet the rather grim definitions stated within your policy’s terms and conditions.

When critical illness is combined with life insurance, the payout will occur only once in whichever morbid event happen first – death or contracting a serious illness.

Can I be refused coverage?

Many people applying for, or seeking advice on life insurance, are under the misconception that if they are declined once then no insurer will allow them a policy.

Even if you are declined by an insurer, as it down to the company whether or not they deem you as insurable it is worth trying other insurance companies and shopping around for the best deal.

A life insurance adviser is best-placed to help you do this – call in-house team on 0 (800) 503-6140 #223.



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