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Life Insurance

Fun is like life insurance; the older you get, the more it costs. ~ Kin Hubbard

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LIFE INSURANCE COVER

What are the different types of Life Insurance?

There are a number of various types of life insurance available on the market to suit individual requirements;

Term Life Insurance: If the insured should die within the life time of the life insurance plan or term covered the policy pays out an agreed sum, as stated in the agreed insurance plan. If the insured lives beyond the number of years of the life insurance plan and the policy expires there is generally no cash value at the end.

No cash value at the end of a life insurance policy does keep the monthly cost of the life insurance policy down.

The older you are at the time of applying of a term life insurance the greater the monthly premium of the life insurance cover therefore there is considerable benefit in taking out life insurance cover when you are young and healthy.

Term life insurance cover normally pays a level death benefit.

By taking out a term life insurance cover with a gradually decreasing death benefit, known as a decreasing term or mortgage term life insurance, it is another way of keeping down the cost of the monthly premiums.

A term life insurance cover policy holder may, in certain cases, be able to renew their life insurance policy extending the amount or number of years of cover or even converting it to a cash value policy without having to go through the underwriting process again and depends upon the insurance company provisions and conditions.

Renewable Term Life Insurance Cover:- Policies can be taken out for a very short time such as a year, but invariably the cover is for a set number of years or to a given age.

The life insurance cover contract, in most cases, allows the insured the right to extend the number of years without the need to provide evidence of insurability which is a valuable provision to have within a policy. Restrictions normally exist which only allow the insured the right to do this up to a stated age for example 65 or 70.

The premiums for this type of life insurance cover may stay level for a given period but then increase at each renewal to reflect the insured’s age. If the life insurance policy is not renewable the person insured may not have the contractual right to extend the term and in such cases the person then has to reapply for life insurance cover. In such cases where someone has to reapply for life insurance they will have to provide insurable evidence again, going through the underwriting process etc.

Additionally, as they get older the insured chances of getting a life insurance policy at an affordable price will decrease over time.

A Convertible Term Life Insurance:- Policy provides the insured with the option of exchanging the policy for a cash value plan.

Once again this type of term life insurance allows the policy holder to do this, in most cases, without having to provide evidence of insurability.

This flexible form of life insurance allows a person who requires cover over a long period of time but cannot afford a cash value plan the option of starting out with a term policy and then converting it to a cash value life insurance plan when it is affordable.

It must be noted that sometimes the right to convert the life insurance plan may be restricted to a length of time shorter than the actual term of the policy.

There are several other forms of Life Insurance that can be considered as well and therefore it is always best to obtain Independent financial advice on these matters and have insurance cover properly assessed in order to match your current and future life insurance protection needs.


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