Life Insurance Cover - A Good Deal

The cost of life insurance has fallen over the past few years and there’s
now more choice than ever, at prices that won’t break the bank.

If you have a family you could provide security for them by taking out
adequate life insurance cover. In the tragic event of your death they would
have enough to cope with, without added financial worries.

There are various types of life insurance and here we cover the types of
term policies on offer.

· A level term policy pays a one off cash payment on death. The amount
insured stays the same throughout the period of cover.

· An increasing term policy is another term for indexed insurance. The value
of the final payout rises in line with inflation. Depending on the terms of
the policy, premiums may also rise accordingly.

· A decreasing term policy is designed around the fact that the amount
payable on death will reduce through the term of the insurance, right down
to a nil balance at the end of the term.

The policies are often used to safeguard loans and mortgages.
The policies above each have their own merits, depending on the type of
mortgage you are guaranteeing.

The level term policies are often purchased to cover interest only
mortgages, where the capital borrowed does not reduce over the years. The
capital sum, remaining the same as the original, is covered by the cash
payment on death.

Increasing term policies offer the protection against inflation, but are
correspondingly more expensive.

Decreasing term policies are often used for repayment mortgages, where the
capital amount owing decreases over the term of the mortgage. Premiums will
be lower for this type of policy, compared to level term insurance.

Benefits from term policies can be paid out in two ways. The first is via a
lump sum payment and the second is via a “family income benefit”. As far as
the second method is concerned, your family would be provided with an agreed
annual income for the remaining term of the policy. The cost of policies
will be affected by the choice of how the payment is to be made. The
insurance company will potentially pay out less money overall if the insured
person lives until the later years of the insurance term. Because of this
the cost of family income policies will be lower.

So far we have talked about covering mortgage and loan payments. Whilst this
would certainly be a weight off the minds of your family, further cover
should obviously be considered.
When working out just how much money your family would need, should the
unexpected happen, it is recommended for an average and typical family, each
parent should have at least £150,000 worth of insurance per child, plus any
death-in-service benefits, which are often linked with your employment. If
you choose to take the family income benefit, then it is thought that you
should plan for an income of between £20,000 to £25,000 per child per year.

Another type of life insurance is known as whole of life. This pays a
guaranteed amount, known as the sum assured, on the death of the
policyholder. There is no specified term on this type of insurance.

It is possible to purchase life insurance with your pension fund. If you
choose this method of purchase, you will be allowed tax relief on the
premiums, so a higher rate taxpayer will get £100 worth of life insurance
for just £60. However, due to higher administration costs, premiums will be
likely to be higher and it is felt that this could cancel out any gain to
basic-rate taxpayers.

Rather than opt for a joint policy, it’s better for couples to take out
individual cover. A joint policy pays out once, on the death of the first
partner, whereas the individual policies will pay out twice.

Get on to your broker – you’ll find one easily if you log on to the internet
– and find out the costs of protecting your family.
It’s worth it for your peace of mind.

About The Author: Get great articles on life insurance from Life Insurance
Angel http://www.life-insurance-angel.co.uk