.jpg)
LIFE INSURANCE FAQ
What is life insurance?
Life insurance is an insurance policy where the insurer agrees to pay out a sum of money in the event of the policy holder’s death. The main purpose is usually to protect the policy holder’s family from financial hardship, particularly if the policy holder is the main earner of the family. In return for this the policy owner pays an agreed premium at regular intervals, which in many cases is calculated based on the policy holder’s medical history.
What are Term Insurance and Life Assurance?
CThere are two main types of life insurance policy. Term Insurance pays out a sum if the holder dies during the fixed period of the policy. Life Assurance also offers a lump sum payout to dependents should the policy holder die during the period of the policy; but if he/she survives that period then he/she (the policy holder) will receive a payment. Thus, Life Assurance is also seen as an important investment option. The payments for Life Assurance are greater than Term Insurance.
Do I need Life Insurance?
It depends if you want or need that security. By definition the benefits of the types of Life Insurance are self explanatory but they will require investment from you. Is it something you really need? Think what your level of priority is. For many Life Insurance is an important commitment to their family but you have to be able to afford it. If you do require life insurance you should consult with a specialist life insurance advisor. Also seek advice from friends and family.
Which life insurance policy should I choose?
You need to check your budget and think carefully what your needs are. There are a great deal of different policies to suit everyone’s needs. Speak to your bank or personal finance advisor if in doubt. Remember, one of the main options is Term Insurance which provides a payout if you die during the term of the contract. You can take this out for the period of your mortgage to relieve dependents of any unexpected burden. You can also take it out just for the period when your children are financially dependent upon you. Life Assurance offers a payout if you die but there is also a payout if you survive the term. It can be an important alternative investment opportunity. It can also give you the peace of mind of helping to safeguard for your retirement.
Why do different people pay different levels of premiums?
The amount you pay depends on the level of risk you provide to your lender. The price you pay for life insurance depends mainly on your age, your health and your lifestyle and occupation. So if you are older, you have health problems, and you are a smoker and you work in a dangerous environment you will always pay more for life insurance than someone who is younger, healthier, a non-smoker in a low risk occupation.
Can I take life insurance out for someone else?
Yes. There are three parties in a life insurance transaction: the insurer, the insured, and the policy holder. The owner and the insured are usually the same person but not always. The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured. Although it is typical for an individual to name his or her spouse or other relative as the life insurance beneficiary non-relatives can also be named.