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Guide To Life Insurance
By: John Mussi
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. |
