Here is a useful guide to life insurance. Simply put, a life
insurance policy provides a lump sum payment upon death of the
policy holder.
In exchange for regular premiums, a life
insurance company will insure your life so that when you die,
the policy should pay out to protect your dependants from the
extra pain of financial hardship.
This is particularly
important when buying a house, or when you or your family takes
on a large, long-term financial commitment. In the event of
death, for example, the payment from a life insurance policy can
be used to pay off a mortgage.
Policies can be arranged
on either a single or joint life basis. Depending on the type of
policy you choose, your insurer will pay either a lump sum or a
regular income which you could use towards meeting any
outstanding debts and trying to ensure your family is able to
maintain its standard of living.
How much they receive
depends upon the 'guaranteed sum assured', the amount for which
your life is insured.
Many people first come across life
insurance when they take out a mortgage, as lenders often insist
on it to make sure the loan is repaid if you should die still
owing them money.
However in some circumstances, only
having enough life insurance to repay the mortgage is
insufficient to fully protect dependants. If you have a partner
who would suffer financially if you were to die or if you have
young children who depend on you, then life insurance is very
important.
Life insurance can be used in many ways, not
just to protect a young family or repay a mortgage. It can be
used to pay Inheritance Tax or protect business against the loss
of a key individual.
You can increase or decrease your
cover at any time, add another life onto the policy and add
other elements to the plan such as critical illness cover,
income protection or mortgage protection.
If your
circumstances change you can increase your cover to make sure
your family is protected.
Life insurance creates an
estate for your heirs. After your debts and expenses are paid,
there may not be much left over for your family but life
insurance can automatically provide assets for them after your
death.
There are several kinds of policies that may be
available to you, if you are healthy enough.
Smoking is
detrimental to health and is a leading cause of life threatening
illnesses. As a result smokers pay higher premiums than
non-smokers as the risk of them dying early is greater. I f you
smoke and do not declare the fact, you run the risk of
invalidating your policy if you have to make a claim.
It
is a known fact that women tend to live longer than men. A
female who insures herself using a 'level-term' policy is likely
to have lower premiums than a male. This is based on the fact
that females live longer and are less likely to claim during the
period insured.
Age is a factor in the successful
application for a life policy. Most insurers have an age bracket
of seventy-five for the provision of insurance. If you are over
the age of seventy-five it is unlikely you will be able to find
cover.
Finally, the older you are the greater the risk
to the insurance provider so the higher your premium will be.
About the Author:
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the
www.directonlineloans.co.uk website.
