Life insurance is unique. No investment or asset can provide the purchaser with such extraordinary leverage and the ability to create liquidity when, in many cases, it is most needed. Obviously, most people purchase life insurance solely for the ultimate payout upon the death of the insured in order to provide for their dependents. However, life insurance can also be used to pay death taxes and estate settlement costs, to shift wealth from one generation to another or to benefit selected charities.
Life insurance policies are typically divided into two major types: term insurance and permanent insurance. From these two basic policies, the insurance industry has developed a number of products using the same essential principals.
The evaluation of life insurance policies are as follows:
-Term policies from different companies can usually be compared relatively easily. As long as the features which are included in the policies are identical, a true premium comparison will provide you with the most cost efficient life insurance policy.
-Whole life policies which are exactly identical in premium, stated death benefits and other options could be substantially different in many other ways. Insurance companies must use certain assumptions, guarantees and projections in valuing their policies.Things that could greatly affect the cost and level of coverage for life insurance policy are as mentioned below:
-Surrender charges:
The amount the company will charge if the policy is terminated.
-Cash value projections:
This shows whether the cash value will be sufficient to keep the policy in force in later years.
-Policy loans:
The illustrations use policy loans to fund premiums in some years or not.
-Dividends:
This ensures that the dividends which the company is projecting are in line with what the company has typically paid in the past.
-Mortality assumptions:
This shows that each insurance company uses its own statistical analyses to determine the risk of an individual dying at a point in time while the policy is in place.
The insurance company and their stability should be considered in evaluating any policy. A life insurance company whose financial stability is in question may need to price policies below that of their competitors. Life insurance is a very complex product and, yet, is essential for many individuals in order to protect their loved ones or meet the other needs for which it is being purchased.
According to the research by the Post Office, more and more people who are over the age of 50-years are using credit cards, with 76% having at least one credit card to help cover their spending. Of those who are in their 70's, 64% had stated that they use a credit card to purchase their groceries and weekly shopping.
With financial stabilities looking unlikely, people within these age groups appear to be those who will be most severely hit, as they try to save. 57% of people who are over 50, have said that they cannot afford to save.
The Post Office also encouraged people in the 50's and above, to neither overpay nor underpay on their life cover policies, as overpaying can affect the level of outgoings while underpaying on their policies could affect the level of cover they receive.
Head of Protection at the Post Office, Duncan Caesar-Gordon said: "In an economic climate where living costs are soaring over 50s are finding they cannot afford to save and are more reliant on credit. Thinking about the future and how the family will cope should the unexpected happen is an extra worry but a simple life insurance plan can offer peace of mind to those concerned about passing on funeral costs and debts."
Jump Money is a specialist in life insurance and is happy to answer any questions you may have related to life insurance, life assurance, term insurance and life cover. The company will strive to fit an insurance package to the exact criteria you need in order to help you avoid buying products you do not need as well as helping you fully understand your purchase. To find out more about how Jump Money can help you protect yourself and your belongings call now on 0844 4170894 or fill in an online quote form today.
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