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[E338]Exam For Life Insurance

by Jane Grimshaw, Jan

We seldom think past our lives in this world, and perhaps spend more time concentrating on our pensions than thinking about life insurance. Planning properly for your dependants in the unfortunate event of your death, can help to spare them from any unnecessary financial burden. Many of us automatically presume that we will live a long, healthy and happy existence, and planning for the possibility of our death is not something we ever think about. If you have any dependants, it is very important to consider how they would cope financially if you died unexpectedly. You need to make sure that you leave any dependants in a financially secure position, which will hopeful enable them to stay in their present home and pay important bills without any additional worry.

Life insurance is a personal insurance plan taken out by an individual against their own life, which ensures that funds are made available to their spouse and/or family in the event of their death - it could also be used to protect a mortgage, estate or business. It involves the payment of regular premiums to the insurance company and, in the unfortunate event of death, will pay out either a lump sum or a regular income to the “trustee” or next of kin.

It is not only the long-term financial requirements of your family that need considering, such as, household bills, education fees, etc., it is also the short-term requirements, such as funeral costs, that need to be considered. There are obviously many life insurance policies available to suit your individual requirements and that is why it is important to “shop around” until you find the right one. You can easily obtain quotes online to give you an idea of the monthly premiums, but do always read the small print first.

Although there are many different types of policies with different levels of cover available, this list will hopefully give you some idea of the main ones that are on offer:

Family Income Benefit Life Insurance – This is one of the least expensive forms of life insurance and it actually pays out an income rather than a lump sum. Following the death of the policyholder, it will provide the dependants with a monthly payment until the end of the policy's term.

Mortgage Life Insurance – This can be taken out on a single or joint life and is designed to pay off the mortgage in the event of the person's death – the cash sum being paid out on the first claim only.

Whole Life Insurance – This policy is not set to a specific term and will continue to protect the interests of the policyholder until they die or surrender the policy.

Level Term Life Insurance - This policy remains level for a fixed term and you can select its duration, which is generally 10, 15, 20 or even 30 years. Once the term is selected you can't usually change it until the policy expires.

Income Protection Insurance/ Accident and Sickness Insurance / Redundancy Insurance/ Critical Illness Insurance and Long Term Care Insurance – These are just a selection of other individual policies that are available and they do exactly as they say- covering you for a multitude of other problems that may arise whilst you are alive. If you are ever unfortunate enough to be made redundant, become injured at work, develop a short-term or long-term illness preventing you from working for a period of time, etc., then these policies could all be very beneficial to you by replacing valuable loss of earnings. Policies, like Critical Illness Insurance, can be taken out on their own or linked in with another plan - however, they have been under criticism in the past due to their reluctance to pay out when required. Although these policies can be very worthwhile, they can also be rather off-putting due to their rather large premiums.

This investment is a necessary one, regardless of how your situation looks. Looking into this will give you peace of mind to go about your daily tasks. Here are some information to to help you.

A term life policy is usually the most popular form of life insurance. This is because it is usually the cheapest. There is usually no cash value and no refund option if the policy is canceled. It can usually be renewed annually or for a term of 5, 10, 15, 20, or 30 years. In the event that the insured meets with any death, the beneficiaries will be able to make a claim on the policy.

A whole life plan is another popular option. A whole life policy lasts until the insured dies or chooses to cash out the policy. There are many variables in this type of coverage and can be a more confusing option. It is good for people who want more flexibility with their policy. There are several categories of whole life insurance, so consulting a financial planner is advisable.

If you are single or do not have any dependents, your life insurance needs may not be very demanding. It is still a good idea to have a small policy to help cover your final expenses such as funeral and burial costs.

One who has a family to support will of course need much more coverage than one who is single. Take into consideration what the funds will be needed for. Look out for debts that you will want to be cleared off in the event of your death. If children are involved, costs that will be incurred for college or school should be taken into account. Consider any immediate needs that will need to be taken care of and how long the money should last.

If you are the primary caregiver of small children, you will need to have life insurance even if you are not generating income. You should think about what it would cost to hire someone to look after the children if you were no longer there. There should also be enough money available for that person's final expenses. Not having enough cover for non-income producing family members is a common mistake that families make.

Getting a life policy for a child has always been subject to mixed reviews. Certain people feel that it is a good idea to cover final expenses in the event of any unfortunate eventualities. These policies are usually quite affordable and some parents do like the assurance that it provides. The probability of a child dying is relatively low, though. So another school of though is to channel money toward a fund for college. In any case, the decision really up to the parents.

Life insurance can be a depressing subject to discuss for many people. But like it or not, it is still a practical and necessary detail that has be taken care of. Once you take care of this detail, you gain a peace of mind knowing that you have done the best you could for yourself and family in the event of any unforeseen tragedy.

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Both Jane Grimshaw & Andrew Chan 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.

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