Summary
A comprehensive and succinct guide to life cover. The article explains all the important technical wordsand what type of cover different policies provide.
Life insurance helps your family to be financially secure in the event of your death.
When you buy set the figure you want the insurer to pay out when you die – this money is called ”the insured sum”. The premium you pay is based on this amount, and on your whether you are male or female and your age.
Your monthly premiums will also be based on the type of online life assurance policy you need. There are two fundamental types of life insurance: level term insurance and decreasing term insurance plus many variation s within these types.
Term insurance is frequently bought at the same time as a mortgage and should cover the same time period as the mortage. If you haven’t died at the end of the insured term, you won’t get anything back. It’s a simple insurance with no aspect of investment. It can protect your family by paying a lump sum should you die within a specific time period.
There are two basic types of cheap life cover. Level term gives a constanly maintained level of payout during the entire life of the insurance cover which means that you beneficiaries would receive the same amount whether you died on the last or first day of the policy. Level Term cover is usually bought with an interest-only mortgage, where the full capital has to be repaid in full on the final day of the mortgage’s term.
Decreasing life insurance is where the policy payout reduces by a preset figure each year, finishing at nothing at the end of the term. Since the amount of payout falls during the term, premiums on decreasing insurance are cheaper than on levelpolicies. This cover is usually only taken out with repayment mortgages, where the outstanding capital reduces during the mortgage term.
There is also a type known as increasing term insurance. Some insurance companies call it index linked insurance. This means that the sum to be paid outincreases by just a small sum each year in line with inflation. Index linked 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 insurance – for instance a “whole of life”. If a person does take up this their convertable option, they do not have to submit any further medical investigations.
If you chose a type of insurance 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 policyholder’s dependents monthly cash payments from the date the policyholder passed away to the end of the policy’s term.
Life insurance can be aquired on-line or from the high street through insurance companies, brokers or from some friendly societies. Many sell directly to the public. Other outlets selling insurance include websites and mortgage brokers.
Factors affecting premiums include the sex, age, sum assured and whether or not you are a smoker. Some companiesinsist on a medical before offering cover, but this is less common as in the past.
Prices for life insurance can alter over time and if you already have an existing policy it might be worth shopping around to find out if you can get a cheaper deal. You can always finish your existing plan without penalty – but always make sureyou have another policy in place before you cancel your existing cover.