Brignall Archer

Life insurance is really essential if you have children or other dependents that would have to manage without your income if you were to die suddenly.  It is not compulsory of course, and single people or those without families or children may well not need life insurance cover, preferring to invest their money in other ways.

Although one might assume that life insurance means simply that, there are actually several different kinds of life insurance that you might wish to consider that would secure your family’s financial future in the event of your death. 

The two main types of life insurance are Term Insurance and Permanent Life Insurance.  The main difference between these two common types of life insurance is that Term Insurance will pay out a lump sum (the sum assured) if you die within a set period of time, and Whole-of-life or Permanent Insurance will provide a payment whenever your death takes place. If you live beyond the agreed termination time of a simple Term Insurance, then your dependents will receive nothing on the event of your death.

There are other types of life insurance that are linked to savings plans that pay a lump sum upon maturity.  Many individuals use these as a form of investment that includes valuable life insurance cover.

Always make sure that insurers are regulated under the FSA before you take out any policies.

How do you know whether you will need a life insurance policy, and if so which life insurance policy should you choose?  Not a decision to be taken lightly, it is a very important one and therefore should be made with the help of a trained professional.  He or she will discuss with you the financial aspects of your life and will recommend the correct policy for you, your family, and your particular circumstances. 

If choosing a policy without first taking professional advice you will have to decide on whether you wish to choose either a Term life insurance policy, Permanent life insurance or some kind of savings linked cover.  You will need to weigh up the pros and cons of each.  Assess the cost of the premiums and see if you can first of all afford to meet them, and then calculate if they will provide a satisfactory return on your money.  Remember that this is money that you might not directly benefit from, but if you die prematurely your family will. It is that peace of mind that makes the premium payments less onerous to pay each month.  At the bare minimum of cover you can relax, knowing that your funeral expenses will be covered, thus saving your family from a financial crisis at an emotional and upsetting time.

You may wish to consider taking out a life insurance policy on behalf of somebody else; typically this is done by parents for their children.  Children’s life insurance is also a form of investment, as the premiums can be paid when the child is at a young age and the policy generally matures when they reach the age of 18 years. The policy can then be redeemed for a lump sum that the child will benefit from.  If invested well, this money could become a valuable starting point for your child when they are beginning a university career, or perhaps as a down payment on a first flat or car.  A wise decision would be to reinvest some of the money in a new investment policy for your child, while also taking out a renewed life insurance policy, so that all bases are covered and they have hopefully been given a great financial start to life.

Group life insurance is a type of employee benefit given by employers.  It is purchased by the company and the type of policy taken out depends on how much the company is willing to invest.  These schemes may cover long term employees or those who have worked for the company for a certain period of time.  It can come as an employee benefit on its own or as part of an employee pension scheme.  It is an essential employee benefit for a company to guarantee, as it can also ensure they get the highest quality employees and compete effectively with their competition.     

As a general rule, group life insurance is the same as any standard life insurance policy taken out by an individual, with the exception that the payments can be slightly lower than conventional life insurance plans.  With an individual’s life insurance policy, the company asks the applicant questions about age, general health and any risky activities or hobbies.  With a group insurance plan the insurance provider may not be quite as strict regarding their requirements. 
 
Research into the different insurance companies is often required to get the best policy at the best price.  Things to check include the deals that companies may offer as part of the premium and also the company’s reputation.  Consider comparing a few plans with plans that other businesses may have taken out to determine if you are receiving the best quotes. 

This is the end point of a life insurance policy, or a fulfilment of the terms.  When the insured person passes away during the term of their coverage, it becomes the responsibility of the next of kin to initiate the process of cashing in the policy.

First of all, the life insurance company will require proof of the insured person’s death.  This generally comes in the form of their death certificate.  The company will then have to determine if the cause of death is congruent with the terms of the policy.  For example, it is possible to get a life insurance policy whereby the cause of death must be ‘accidental’ – that is, the cause of death must exclude suicide or death due to poor health.  The determination process can be quite ambiguous in the case of accidental death coverage, or other more specialised kinds of life insurance.  For this reason, always make sure to read the terms and research the likelihood of obtaining a cash value from the life insurance policy before buying.

Whole life insurance ensures that the policyholder will always produce a cash value for the beneficiaries upon death.  This type of coverage is often flexible, with the insurance holder able to make withdrawals or ‘loans’ from the life insurance fund.  The insured should, however, bear in mind that any such withdrawals will reduce the total payout at the end of the policy if the borrowed money is not replaced.

When it comes to insurance policies, many people have a lot of questions. For example, what is the difference between health insurance and life insurance? The simple answer is that there is a huge difference!

Health cover protects you from extensive medical expenses by covering all or part of the cost of certain medical procedures. Life insurance pays out the value of the policy to the beneficiary when the insured individual dies.

There are two main types of life insurance – whole and term. The latter is the cheaper solution simply because it is just life insurance. You can purchase it for as little as one year and up to 30 years, in some cases. In order for the beneficiary to collect on the policy, the insured must die during the term. Whole life insurance is a little more involved as it includes life insurance as well as an investment plan.

The price that you spend on a health insurance policy, as well as a life insurance plan, will be determined by your age and overall health. In general, younger individuals pay less than those who are older. Poor health also means higher charges.

Deciding between health insurance and life insurance shouldn’t be an issue, as the two are totally different and both are necessary. Some people obtain private health cover through their employers, but life insurance is more often bought by individuals.

There are two main points you need to keep in mind when you are looking for a life insurance policy.  The first is how much you can afford to pay in premiums each month; the second is the amount of cover you would like to have if the policy pays out.

If you want to get life insurance for a set period of time, level term assurance could be a good choice for you.  There are many good reasons for wanting this type of policy.  For example, if you have children, you may want to ensure they get a payout if you should die within a specified period of time.  The term will usually be long enough to cover the period between now and the time they become adults and able to look after themselves.

Some life insurance policies may decrease in value as time goes by.  However, the key word in level term assurance is ‘level’.  This means that whether the policy was to pay out a year into the term or ten years in, the payout would be the same.  This can provide enormous peace of mind because you know where you stand with the policy.

As always, you should shop around to get the best price for the policy you need.  This is the best way to ensure you will have the cover – and the peace of mind – you want.

It is imperative that you disclose the full facts when completing a life insurance policy; if you are not entirely honest, you could invalidate the policy.

Within the insurance industry, this information is known as ‘material’ facts and it includes details that are considered reasonable and which you recognise as being relevant to the price of your policy and the insurer’s willingness to provide cover.  Life insurance questionnaires or your insurance broker will usually ask you a series of questions and it is important that you answer honestly.

Some types of policy will not pay out in particular circumstances, for example, if someone dies from drug or alcohol abuse.  Others may exclude high-risk activities, such as certain dangerous jobs or extreme sports.

Your health is also taken into consideration, so if it is poor when you take out your policy, some causes of death may be excluded altogether and you may find it difficult to find an insurer.  If you are a smoker, premiums will be considerably more than if you are not, so it makes sense to give up if you can.  In the case of life insurance policies, insurers consider non-smokers as being anyone who has genuinely been smoke free for a year or longer.  There is no sense in being dishonest about it, because if your insurer finds any evidence that you have smoked, when you have declared yourself to be a non-smoker, the policy will not pay out in the event of your death.

It is always best to take out life insurance when you are at your healthiest.  However, if you have an existing health problem all is not lost.  Some insurance providers specialise in supplying life cover for particular medical conditions, so it is worthwhile to contact an insurance adviser.  An adviser will have access to information on which insurer offers life cover for your particular medical needs. 

The impact of a particular illness on the availability and cost of your life insurance policy will depend on how well managed the condition is.  For example, if you have had diabetes for a number of years and simply manage the condition by monitoring your diet, then this should not dramatically affect your chances of obtaining life insurance.  However if you have diabetes and need daily insulin injections, then this is more likely to increase your insurance costs and limit the amount of policies available. This is due to the fact that you will be classed as being at a greater risk from related complications. 

Even those suffering from serious medical issues in the past such as heart complaints or cancer should be able to find suitable insurance.  With any major medical issue, an insurance company will most likely need to know when you last received any treatment directly related to that illness, how the illness affects your daily life, what medication you take and how stable your condition is.  If you are now in good health or your on-going condition is well managed, there will be a life insurance policy available to you.

What is it?

In return for your monetary investment in an insurance policy, the policy provides the policyholder with a certain degree of protection against risk.  Let us breakdown the term single premium life insurance in order to understand better what it means.  The term single premium means that this kind of policy is bought by paying a single lump sum payment, instead of payments through instalments.  Under a single premium life insurance, a death benefit is provided to the beneficiaries of the policyholder in the form of a fixed payment amount.  The amount paid out on the death of the policyholder is greater than the principle amount.  Most of the time, it is twice the initial investment.

‘Single Premium Whole Life Insurance’ and ‘Single Premium Variable Life Insurance’ are the two prime types of single premium life insurance.  A fixed interest rate is offered under ‘Single Premium Whole Life Insurance’, while variable interest rates are offered under ‘Single Premium Variable Life Insurance’.

Benefits of Single Premium Life Insurance

The guaranteed death benefit is the biggest advantage when deciding to opt for a single premium life insurance policy.  As mentioned previously, the death benefit may be twice the amount of the initial investment.  In addition, the investment is able to grow tax-free, and the death benefit paid out to the beneficiaries is tax-free.  A further advantage is that a loan may be drawn, by using the single premium life insurance as collateral.

Life insurance may be one of the most important purchases a young family can make.  When a family’s primary provider dies, life insurance can mean the difference between struggling to get by and thriving.  However, some people put off buying life insurance because it seems like another unnecessary monthly expense.  Using a few tricks and making a few changes in life can help you save money on their life insurance.

The earlier you begin paying into a life insurance policy, the less you will have to pay for it.  Young people are at less risk than older people for developing certain life-threatening illnesses, so they typically do not pay as much for life insurance.  Buying at this rate ensures that any illness that does occur is protected.  If you do not buy insurance until you become seriously ill, your rates go up considerably.

Stay within a healthy weight range by dieting and exercising.  Many life insurance companies ask you to answer questions about your lifestyle, and showing that you have healthy habits can lead to a decrease in your life insurance costs.

It is just as important to avoid unhealthy habits as it is to develop healthy ones.  Smoking, one of the most unhealthy and addictive habits today, needs to be avoided.  Since smoking puts you at a higher risk for many diseases and health problems, quitting smoking is one of the most effective ways to lower life insurance rates.

It is important to protect your family by investing in life insurance.  With these tips, it is easy to make life insurance affordable.