Life Insurance
Life insurance is an essential form of insurance protection, yet many people don’t like to think about it. Also known as life assurance or term assurance, life insurance provides financial support for your loved ones after you have passed on by paying out a lump sum. It is uncomfortable to think about death, but is irresponsible not to make provision for the future.
Life insurance is a way of ensuring that your financial contribution to the household continues to be made. If you have mortgage payments, pay school fees and are the primary earner, dying without life insurance could leave your family in dire financial straits.
There are several types of life insurance cover. Some policies pay out a guaranteed sum if the insured person dies during the term.
This is called level term insurance. You may also choose to have the policy pay out a guaranteed monthly sum instead of a lump sum, known as family income benefit. Decreasing term insurance is often used to cover a mortgage and the level of cover – and the potential payout – decreases during the term of the policy. Some policies increase cover – and premiums – during the life of the policy in line with inflation.
Other life insurance policies can be renewed at the end of the term without the need for a health review. With some policies, you can add critical illness cover to life insurance. That means that if you develop a life changing illness such as blindness, stroke, heart disease, cancer, Alzheimer’s and others, then the policy will pay out.
Life Insurance Premiums
Life insurance premiums, like other insurance premiums, are based on risk. Insurers assess your likelihood of living to an average life expectancy and set premiums accordingly. This means that people who have a poor medical history might find it difficult to get life insurance or may have to pay high premiums to get it. Smokers are also high risk. People who work in risky occupations such as in the armed forces and those who engage in dangerous sports may also face higher premiums or may be excluded from getting life insurance. People over 60 also face difficulty in getting affordable life insurance, as it is presumed that they are high risk for life threatening illness.
Life insurance premiums and benefits vary widely, so shop around to find the best deal. There are plenty of comparison sites and insurance brokers who can help you find the life insurance deal that will match your circumstances.