National Society

Many people are feeling the pinch as their household budget tightens. When this happens non-essential items tend to be dropped in favour of more affordable or cheaper options. A large number of people may even consider cancelling or not renewing insurance policies that they deem unnecessary, and life insurance may fall into that category. However, cancelling a life insurance policy is not to be recommended.

Life insurance is there so that if anything were to happen to the policyholder their loved ones would be taken care of financially. Losing a loved one cannot be made easier by any amount of financial compensation, but when the household income is reduced, or, if the person who passes away was the sole earner in the house and the income stopped completely, it would cause additional strain where there is already enough heartbreak.

A life insurance policy, even just a small one, can help to cover things not considered in everyday budgeting, such as funeral expenses and solicitor’s costs, which can often run to thousands of pounds, and mortgage repayments if there is no payment protection insurance policy in place. Leaving loved ones without the financial worry a death can bring could cost just a few pounds each month.

Some people may think they are too young to worry about such an eventuality as death, but nothing is definite. The sudden passing of a loved one is already hard enough to cope with without additional financial worries. A life insurance policy is the best way to avoid such a burden.

Life insurance is an assurance policy that you take out to ensure financial security for your loved ones in the event of your early death.  However distressing this is to contemplate, it is a relief to know that your family are protected against financial hardship if such an event occurs.  Apart from ongoing living expenses the costs of your funeral and other associated expenses will be provided for. 

Life insurance premiums are paid by a monthly or annual payment. From the moment the policy is activated, until it matures or in the event of your death, the payments must not be missed.  The named beneficiary will receive a lump sum if you die, but in some instances insurers will classify the policy as fully paid-up after 25 or 30 years and you can leave any funds in the policy to keep growing in value if you wish.  If you do this no further premiums are necessary.

Choosing the right life insurance policy for you and your family can be a minefield; there are many different policy types, and you will need to make the correct decision.  Seek professional advice before you undertake such a serious financial decision to minimise any future hardship your loved ones might suffer if you get it wrong.

Be wary of taking the cheapest available quote, as this may not provide the cover that your family will need.

A life insurance plan is a recommended way to make sure that your loved ones are financially stable in the event of your death.  More commonly, people will opt for the Permanent Life Insurance plan that covers an individual until they eventually die.  This leaves beneficiaries with money to cover expenses and the costs of a funeral for the plan holder.  Often these types of plan are specific to the company which provides it and may not cover certain things such as suicide or terminal illness.  This is why it is best to determine which plan suits your circumstances best.

Term Life Insurance

This type of plan will only cover you over the time period you specify.  You are able to take out a policy to cover you for five years up until thirty five years depending on what you would prefer.

Seniors Life Insurance

This would be in the case of seniors who may choose to work past retirement and cannot take out a Permanent Life Insurance plan. 

Higher Risk Insurance Plans

These can cover you if you take part in high risk activities.  Many insurance companies prefer not to provide life insurance for people who regularly take part in high risk sports such as rock climbing or sky diving.  This would also be the type of plan you choose if you were a smoker for example, or were suffering from a long-term illness such as heart disease or cancer.

These are just some examples of the types of life insurance plans that are available.  There are several more and it is wise to research providers thoroughly and choose the plan which best suits your circumstances and lifestyle.

Term life insurance is simply life insurance that lasts for a fixed length of time.  Conversely, whole-of-life life insurance covers the insured party for the whole of their life, at the end of which the policy generally pays out to survivors.

Why would you take a life insurance policy that has a fixed term, and therefore is not guaranteed to pay out by the end of the term?  For the answer to this, remember that those who take out the policy are not the beneficiaries, so it is with the needs of others in mind that anyone takes out life insurance.  In the case of term life insurance, the chance of not receiving payment by the end of the policy takes a backseat to the assurance that in the case of a fatal incident, the immediate family and dependents of the insured person will benefit.  Those who would be interested in such a policy may be those temporarily taking on difficult and dangerous jobs such as oil rig work, driving jobs or being a security guard.  It is important to remember to find a policy that not only offers the fixed term desired, but also would be likely to actually pay out in the event of a fatal incident.  Read the terms carefully, and seek legal advice if necessary.

Whole-of-life policies are a more long-term solution, and are well suited to average family situations.  The insured continues to pay into the policy over their whole life, and according to the terms, the amount paid back in the case of death grows with payments and inflation.

If you are considering taking out some form of life insurance, it is a good idea to look into the various different types that are available.  One of the more popular types that people choose to buy is called term insurance.  You may also see this referred to as term assurance, but both names refer to the same thing.

The main benefit of term insurance is that it is generally cheaper than other policies that last for an indefinite amount of time.  For example, you can take out a policy that lasts for ten years.  Other lengths of term are also available; so make sure you consider how long you want to be insured.

A good example of this would be if you have a dependent child who is aged ten.  You may want to have your life covered for the next ten years, until they are old enough to leave home and be financially independent.  There are many other examples of situations that would require you to have term life insurance for a specific period of time.

If you are married, or part of a civil partnership, you can also take out such a policy as a joint agreement.  Again, make sure that a term insurance policy is the best choice for you.  It may be cheaper as far as the premiums are concerned, but depending on your situation, you may be better to take out a whole-of-life policy instead.  Once you know all the options, you can make an informed decision.

There are several types of life insurance policy available and knowing which one to choose can sometimes be difficult.  However, there are some basic terms that you should be aware of when selecting the right policy for you. 

A term life insurance policy can be bought by anyone.  Though it offers cover for a set period of time and is usually renewable, the cost will change every time it is renewed.  This type of policy normally expires when the holder reaches the age of 75, although the terms and conditions will vary depending on the insurer and the needs of the policyholder.  The amount of cover that the policyholder has is a set amount and does not change. 

Decreasing term life insurance is a policy that is designed to cover a mortgage, so as the policyholder makes mortgage payments and the amount owed is reduced, the amount of life cover provided is also reduced.  If the policyholder dies, any outstanding mortgage is paid off, but no further amounts are payable. 

Permanent life insurance is a policy that covers the policyholder for their entire life.  The value of the policy will normally increase as time goes on. 

You may opt for a policy that has index linked term insurance, which ties the value of the policy to the retail price index, so it should increase each year, thus taking account of inflation and the rising cost of living. 

Life insurance is something that everybody should have and finding the right policy for you is easier than you might think.  With the large number of comparison websites that are available today it is very simple to put your details in and let the site do all the hard work for you.  The chosen comparison website will ask you a number of personal questions about your lifestyle and health, so that it can calculate the amount you might expect to pay for life insurance. 

The site will present you with quotations from a number of different life insurance providers so that you can compare the costs side by side.  This will give you the chance to see the benefits that each one offers.  There are extras that may automatically be included, such as critical illness cover, but on some policies this may be an extra cost that you have to budget for. 

There are also a number of life insurance providers that do not allow their products to be listed on price comparison sites.  For these you will need to contact the company directly, either by phone or by visiting their corporate website, to obtain a quote. 

It is important to ensure that you give them all the correct information so that you receive accurate quote.  Any incorrect or misleading information could invalidate your policy, which is likely to cause a serious problem for your loved ones, should they ever need to make a claim.

Opting to take out a life insurance policy is an important decision.  Some people put off this important part of their financial planning because they do not wish think about the situation in which it will be needed, while others simply consider it an additional expense that may not be a priority.  However, for many people life insurance cover is a necessity and ought to be treated as such.

So who needs life insurance?  The answer is that most people could benefit from investing in some sort of life cover.  For those who have a mortgage, life insurance is a necessity in order for repayments to be met in the event of their death – ensuring that their property will pass on to their heirs rather than into the hands of the mortgage company.

Anyone who has dependents should consider investing in a life insurance policy since in the event of their death they will no longer be around to provide for the needs of their loved ones.  Parents and breadwinning partners should purchase life insurance to look after their spouses and children once they are gone.

And while those with no mortgage and no dependants may not think that life insurance is necessary for them, they may wish to consider who will pay their funeral expenses in the event of their death – taking out a life insurance policy can help prevent a situation where family and friends are left out of pocket paying for a service and burial or cremation.

Whether you are just starting out on your own or are an established individual with considerable assets there are many factors that go into the decision to buy life insurance and how much is needed.   Life insurance coverage is a wise financial investment because it provides the means to meet the financial concerns of the policyholder in the event of the unthinkable happening. 

One benefit that appeals, particularly to individuals with dependents who rely on them for financial support such as parents of young children, is that a life insurance policy can replace lost income if one or both parents dies, thus providing financial security for the children after the policyholder’s death.

Another benefit of life insurance coverage is that it generally includes benefits to pay final expenses upon the death of the policyholder which would include funeral and burial costs, and may also provide benefits to cover other debts such as estate costs and medical expenses incurred prior to death.  

Life insurance policies can also provide a means to create an inheritance for the heirs of the policyholder if they are named as beneficiaries.  The policyholder nominates the beneficiaries when a policy is purchased and then upon the death of the policyholder the funds would pass on to the beneficiaries as an inheritance.  This offers the policyholder the ability to give a helping hand to their family, for example by getting the next generation off on the right path financially.  The policyholder can also choose to name a charitable organization as beneficiary, thereby providing a means for contributing a large sum to a favoured charity. 

Finally, life insurance can be used to create savings for the policyholder.   Some life insurance policies accrue a “cash value” over time; if this amount has not been paid out as a death benefit then the policyholder may be able to borrow or withdraw this money whenever they need it.

It is important to consult your insurance professional to assess your needs and the particular situation.

For young couples, nothing is likely to be further from their minds than the possibility that one day one or other of them will no longer be there.  And while everyone hopes that that day is a long time in the future, the truth of the matter is that we can never truly know what is just around the corner.

This is why it is so important to have plans in place for any eventuality.  Thinking about life insurance when you are young may sit uncomfortably, but the reality is that this kind of planning can save families additional stress and heartache in the event that they are struck by a tragedy.

For parents, investing in life insurance is investing in their family’s future stability.  If a parent dies, families can be thrown into chaos, a situation that will not be helped by financial stresses caused by poor financial planning.

For the cost of a small monthly premium, parents and spouses can be sure that their loved ones will be well provided for in the event of their death.

Life insurance policies can be used to pay off outstanding mortgages, to keep households ticking over while they grieve and adjust to their new situation as well as for death related expenses such as funeral costs.  Payouts can also offer parents peace of mind that their children’s education or training will be taken care of, even when they are unable to be there to fund it themselves.