Life Insurance Guide

Life Insurance - What Is It?

Life insurance is a legally bound contract between the policy holder and life insurance provider where the insurer agrees to pay out money, often in the form of a lump sum, in the event of death.

It's main purpose is to protect dependents from financial pressures. If a family's main breadwinner has died, for instance. Life insurance is usually paid for via regular payments, often in the form of monthly premiums and on a yearly contract.

Types Of Life Insurance

There are many different life insurance policies out there so do remember to compare policies carefully.
Use comparison guides and ask a financial advisor if you have any unanswered questions.

Term Insurance - Term insurance, also known as temporary life insurance, pays out a sum if the holder dies during the fixed period of the policy; i.e. a defined time period.

Life Assurance - Life assurance offers lump sum payouts to dependents should the policy holder die during the period of the policy; but if they survive that period they will then receive a financial payment.

Permanent - Permanent life insurance is life insurance that remains in force until the policy pays out; or the owner fails to pay out on the premium. A permanent life insurance policy can't be cancelled by the insurer.

Endowment - Endowment policies are policies where cash value builds up and equals the death benefit at a certain age. Endowment insurance is paid if the insured lives or dies, after a specific period.

Accidental Death - Accidental death life insurance is a type of limited life insurance covering the policy holder if they die in an accident. Because they are limited in scope, i.e. only covering accidents they are usually cheaper than more comprehensive policies.

Group - Group life insurance policies cover a group of people on one contract. This type of life insurance policy is often taken out by a company for its employees.

Limited - A permanent life insurance in which all the premiums are paid over a specified period. Following that period no additional premiums are expected to maintain this form of life insurance policy.

Critical Illness - Provides a lump sum payment following the discovery of specific life threatening illnesses.

Fatal Accident - Some life insurance policies offer additional payment protection if the policy holder dies following an accident.

Remember, these terms are a general guide only and different insurers will often use conflicting terms for
similar types of policies. Always check carefully the conditions and definition of any policy you are considering
with the insurer.

Choose The Best Life Insurance For You

Life insurance can provide a powerful security blanket for many people but it is complicated and can be expensive so you need to choose the best type of life insurance for you and carefully weigh up your financial situation and your own individual requirements in this matter.

Many people are attracted to term insurance because it will pay out if you survive the term so in a way can be a form of saving and financial investment. Alternatively, permanent insurance can be a powerful way of safeguarding your family financially following your death.

Always check the details of any policy carefully and make sure you can afford it. Weigh up all your options and issues, including your existing outgoings before making a decision.