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Buying Life Insurance - Some Important Considerations

What are you looking for in the policy that you have in your mind? Will it achieve your desired goal? Are you looking for a policy that will pay for your funeral charges, pay your mortgage and other debts, pay for the education of your children or compensate for the loss of your income. Are you looking for a combination of features? Are you looking for a policy for yourself or for your spouse also?

Another aspect is to decide for how long you want the insurance to continue. The selection of life insurance term depends on various factors such as mortgage pay off period, completion of children's education, your retirement plan and so on. These factors will give you an idea to decide the type of insurance you should go in for. Online information can put to rest all your fears. Once you have decided your course of action, you will be comfortable with the life insurance plan that you have identified for yourself.

It is always advisable to compare the life insurance quotes on the internet and find out where you stand. You can also find whether you have been quoted rates for a standard or preferred life insurance. The majority of population lands up with standard life insurance because of some health problems. Only those people who are perfectly healthy are eligible for the preferred life insurance which is given once your medical report and family health history is available. The more information you provide on your health the better it is. The premium for preferred life insurance is less as compared to standard life insurance.

The next question arises from which company you should purchase the insurance policy. Which company can be trusted? Be careful about the insurer's strength's, weaknesses, financial stability and their availability whether it is through telephone or web site only. Some of them can be probed through for their financial strength and stability. You should have an insurer who is readily accessible and can be trusted.

As changes are likely to occur in your life you should consider various restrictions placed on the policy, whether conversion and cancellation options without any charges are available at the time of going in for a particular policy. Are any renewal options available? If yes, study them in detail before finalizing an insurance policy for yourself.

Life Insurance Companies Ratings

It’s simple, always have your Life Insurance policy “Written in Trust". This may sound technical but it is easy to understand and it’s so easy to organise.

“Written in Trust" ensures that in the event of a claim, the policy will pay directly to the beneficiaries you name on the policy when you first take it out. If you do not do this, the policy will payout to your legal estate and this inevitably means that the money stays in your solicitor’s hands for some time.

Yes, that implies legal delays and, of course, your solicitor takes a small cut!

Then, if the value of your taxable estate exceeds £275,000, and remember your home can easily account for the lion's share of the £275,000 limit without much difficulty, your estate will have to pay Inheritance Tax. This represents 40% of the estate’s taxable value in excess of £275,000. So, if your estate has to pay Inheritance Tax and the proceeds of your life policy go to your estate, the taxman gets his hands on 40% of your life policy!

But it’s so easy to avoid all these problems.

Simply get your policy “Written in Trust". Then the life insurance company pays out immediately, directly, and totally tax-free, to the persons you have named on your policy. All you have to do is tell the online brokerage organising your policy that you want your policy “Written in Trust" and they will automatically sort it out for you.

This advice remains sound even if the policy is designed to pay off your mortgage. Rather than your estate using the insurance payout to pay off your mortgage, the policy can be written in trust and paid to your partner and then he or she can use that money to pay of the mortgage. The benefit? Well if your taxable estate exceeds the IHT threshold the mortgage is effectively paid off tax-free.

The extra good news is that all the brokers we’ve met will arrange for your policy to be “Written in Trust" as a free of charge service. So it’s a win win situation and there aren’t many of those around these days !

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About Author

Both Van Whitsett & Michael Challiner are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Van Whitsett has sinced written about articles on various topics from Home Improvement, Computers and The Internet and Life Insurance Companies. Van Whitsett has published a number of articles, both online and off. For more information about term life insurance, please visit:

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