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Some Useful Information You’ll Need Before You Shop For Life Insurance.
Summary
A extensive and succinct guide to life insurance cover. It explains all the key termsand what type of cover differentpolicies provide.
Life insurance helps your dependants to be financially secure when you die. When you purchase decide the amount of cash you want the underwriters to pay out when you die – this money is called ”the assured sum”. The premium you pay is based on this amount, and on your age and gender.
Your monthly payments will also be based on the style of insurance policies you need. There are two simple types of life insurance: level term insurance and decreasing term insurance plus many variation s within these types.
Term assurance is frequently taken at the same time as a mortgage and should cover the same period as the mortage. If you haven’t died at the end of the insured term, you won’t get anything back. It is a simple insurance with no aspect of investment. It protects your family by paying out a cash sum should you pass away within the time covered by your insurance policy.
There are two basic styles of term assurance. Level term gives the same payout during the entire life cover which means that you beneficiaries would receive the same amount whether you died on day one of the policy or whether you died right at the end of the term. Level Term cover is usually bought with an interest-only mortgage, where the full capital has to be repaid on the final day of the mortgage term.
Decreasing term cover is where the cash to be paid out reduces by a known sum each year, finishing at nothing at the end of the term. Since the amount of payout declines during the term, premiums on this kind of insurance are cheaper than for level plans. This insurance cover is usually only taken out with repayment mortgages, where the value of the outstanding mortgage reduces during the period of the mortgage.
There is also a type known as increasing term insurance. Some insurance companies call it index linked insurance. This means that the cash payout increases by just a small sum each year in line with inflation. Increasing term insurance is a good way of protecting the buying power of the sum you have insured for.
With convertible term policies, the policyholder has the possibility of changing to another type of life assurance – for instance a “whole of life”. If a person does take up this possibility, they do not have to have any more medical investigations.
If you chose a type of life assurance called family income benefit your family would receive a tax free monthly income if you were to die and this income would continue until the policy reached its termination date. This gives the plan holders dependents regular payments from the date the policyholder dies to the end of the policy’s term.
Life insurance can be purchased on the internet or from the high street through insurance companies, brokers or from some friendly societies. Most sell directly to the public. Other outlets selling insurance include websites and mortgage brokers.
Factors affecting monthly premiums include the whether or not you smoke, your age, sex and the insured sum. Some insurance companies insist on a medical before offering cover, but this is not so common as in previous years.
Life insurance prices alter over time and if you do have an existing policy it might be worth shopping around to find out if you can get a cheaper deal. You can usually finish your existing plan without penalty – but make sureyou have another set of cover in place before you do so.
If You Get Sick Will Your Family Be Secure?
Summary
Permanent Health Insurance, Life Assurance and Critical Illness Insurance should all be contemplated by people who have a spouse or children or anyone dependant on them for financial security. Read this article to find out what is relevant and available.
It is appalling but a fact that 1 in 3 of us will suffer some form of cancer before the age of seventy. Kirsty Hughes, a director at Sarah Shaw and Partners, a firm of Independent Financial Advisors, says “”These are not great odds, so protection insurance is very necessary”. Life Assurance is the most common cover taken out, although it is questionable as to whether it is the most essential. Life Insurance is imperative if you have a husband or wife or children but not if you don’t as it pays out after you die. Many people feel that they can’t afford to have Life Assurance but the truth of the matter is that they can’t afford not to have if they have dependants to protect and support. JD Metcalf and Sons a firm of Financial Advisors reveals in a recent survey that 25 per cent of people with a family don’t know if they have Life Cover or not and twenty five per cent don’t have it.
Many business packages compare life insurance but they are by and large not enough to provide an income for a spouse with dependants and cover the mortgage off. A average rule is to insure yourself for fifteen times your income.
Tesco Finance’s research has revealed that during the last fifteen years the average price of Life Insurance Cover has fallen by 44 per cent basically because people appear to be living longer due in part to medical advances making it possible for sick people to get better from conditions that, at one time, would have been terminal. People who already have life cover are possibly not aware of this element and will not gain anything except for when a claim is made, so do not need to feel that they have to stay with their existing insurer – there could well be better deals on the market.
However, Permanent Health Insurance and Critical Illness Insurance premiums are increasing for the reason that people are surviving severe illness and making claims on these policies. They are still vital and ought to beaccounted for if possible particularly if there are no dependants. The question that you have to ask yourself is can I afford not to have an income? For most of us the answer is no and everyone should have income protection.
PHI settlesa tax-free income which is worked out on a percentage of your salary for ‘non-critical’ as well as critical illness and for the complete length of time that you cannot work.
Critical Illness Insurance, should you unfortunately become terminally ill will settle a tax-free lump sum, which can help to reduce money worries or pay for any adaptations that may be indispensable if your mobility has been affected. Statutory sick pay (SSP)doesn’t pay out enough money to assist with the financial impact that severe illness can bring about.
The insurer calculates a premium on your risk profile. If you have a family history of severe illness or drink excessively or smoke a few cigarettes a day your payments will be much higher. Premiums are calculated on the individual but if some of your family have been severely ill, particularly below the age of 49, this could increase your premium by forty eight per cent.
Are Your Illnesses Critical
Summary
The important facts you should consider when deciding on critical illness cover and the varietyof companies tendering this kind of policy.
Your mortgage provider may give you several financial products including critical illness cover. But, as they are not specialists in this field, you will almost certainly find a better offer somewhere else.
The level of cover on offer is just as significant as the premium when seeking critical illness cover. The policies from Nationwide and Alliance and Leicester are extremely limited says an adviser at Tesco Finance, a telephone and online life assurance broker. Legal and General covers only eight critical illnesses, with Friend Provident covering just 9, whereas the market leader, Swiss Life, covers 39.
Loss of speech, deafness, blindness, diabetes, Aids and Parkinsons are some of the conditions not covered by some of the Insurance companies. The senior advisersays that it does not warrant considering a policy, which covers less than 24 ailments.
An umbrella term built into all policies is ‘total and permanent disabilities’, this term means you are insured for any illness, which stops you from working permanently.
You need to be alert to the lanuage as some policies cover ‘any occupation’ whereas other policies only cover your ‘own’ occupation. You will not receive a payout under a ‘any occupation’ policy unless you are completelyunable to carryout a job, however unskilled. Therefore The adviserrecommends you sign up for a ‘own’ occupation policy.
There are a large number of companies as well as Swiss Life who offer full insurance including Scottish Provident, Scandia, Zurich life, Friends Provident, Scottish Equitable, Liverpool Victoria, Norwich Union, Legal and General and Zurich Life.
For years life insurance has been sold by a mortgage company. This resulted in lots of people never buying critical illness insurance. There are five times as many claims on critical illness insurance compared to life insurance, when the consumer has taken out both kinds of insurance.
Life insurance cover is tremendously important, specially if you have family, as they will welcome the lump sum payment on your death. However critical illness cover should be the priority if you have debts to settle, particularly a home owner loan. The senior adviserconsiders critical illness to be more important as it covers the cost of your house and food, even if you are sick and unable to work.
The premiums will be larger if you are a smoker or heavy drinker and will also be more expensive if you are older. A decreasing term policy, which is aimed at people only wanting to insure the cost of their mortgage, is the cheapest.
One of Hamptons customers, a 25 year old non-smoker, who required£100,000 cover from a critical illness, long term policy, was given a price of £14-40 per month, which rose to 24 pounds 30 pence for smokers. However a senior adviserfrom LifeSearch recommended a policy, which gave both life protection