Life Insurance

Life insurance is a contract between you and an insurance company.  In the event you pass away, in exchange for your premium payments, the insurance company will pay your relatives money as a lump sum or as regular payments. Life insurance is designed for you to make sure that your loved ones will be looked after if you’re no longer there to provide for them.

 

Do I need Life Insurance?

These are factors you need to consider when taking out life insurance. The best way to determine whether or not you need life insurance is to answer a few simple questions. Would your loved ones be financially stable on their own in case something happens to you?  And also, would your death have a financial impact on your children, partner or other relatives? In short, if you have relatives who depend on your income, you need life insurance.

 

How does it work?

When you take out life insurance  you pay a monthly premium, and the insurer agrees to pay a sum of money to your beneficiaries if you die. It’s usually over a fixed term, however, some policies can run for the rest of your life (Whole of life, over 50’s plans)..

 

How much does life insurance cost?

The exact monthly price of your life insurance will depend on your personal circumstances and how much cover you need. There are a number of factors that will affect your monthly premiums, such as: the amount of cover you need, type of policy, your age,  health situation, your lifestyle, etc.

 

Main Types of Life Insurance

With all of the life insurance options available, it may seem complicated to choose the right one. Let’s start with two main types of life insurance: Term life insurance, Whole of life insurance and Decreasing life insurance. The biggest difference between these two types of life insurance covers is that a Whole of life insurance lasts your entire life, while term insurance lasts for a specific time period that you choose when you buy a policy —  10, 20 or 50 years, which is usually the maximum. Decreasing life insurance is usually used to protect you mortgage as it decreases alongside of your mortgage. It is typically the cheapest option.

 

Term Life insurance provides coverage for a certain amount of time and the premium payments stay the same amount for the duration of the policy. Typical choices are policy lengths are 10, 15, 20, 25 or 30 years.

If you pass away within the term of your policy, your beneficiaries can make a claim and receive the death benefit money, tax-free. Once the term of the policy expires, you may be able to renew the coverage in increments of one year, known as guaranteed renewability. But each year of renewal will be at a higher rate.

 

Whole of life insurance covers you for the rest of your life and pays out regardless of when you die, as long as you’ve paid your premiums.

In most cases, whole of life insurance is more expensive than a term life insurance. However, the specific cost of whole of life insurance can vary significantly among policy types.

Decreasing Life Insurance is a type of insurance that’s designed to meet the demands and needs of people who want to help protect a repayment mortgage. How does it work? A cash sum could be paid out in the event of your death or if you are diagnosed with a terminal illness with a life expectancy of less than 12 months, while you’re covered by the policy.

With this type of insurance, the amount of cover reduces in line with the way a repayment mortgage decreases. Is this solution for you? If you think you need a policy that will help protect a repayment mortgage and give you peace of mind that your family can continue living in your home if something happens to you, this could be a suitable option for you. For more details, contact our advisors.

Many factors are taken into consideration while tailoring an individual Life Cover plan. So, contact us today and leave any confusion behind while getting the best out of your insurance policies.