Life Insurance: FAQs

Q:What is Life Insurance?

A: Life insurance is a valuable insurance policy where the insurer agrees to cover a sum of money in the event of the policy holder's or anyone covered on the policy's death. The main purpose of this type of insurance is usually to protect the policy holder's family from financial hardship, especially useful if the policy holder is the main earner. In return for this the policy holder pays an agreed premium to the insurance company at regular intervals and in many cases this fee is based on the policy holder's medical history.

Q: What are Term Insurance and Life Assurance?

A: There are two main types of life insurance policy. Term Insurance which pays a pre-agreed sum if the policy holder or anyone named on the policy 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 they survive the policy period they they (the policy holder) will receive a payment. Many Life Assurance is also seen as an important investment option but the payments for Life Assurance are greater than Term Insurance.

Q: Do I need Life Insurance?

A: It all depends if you want or need that security. The benefits of the types of Life Insurance are self explanatory but they will require investment from you and it is a personal decision. Is it something you really need? Think what your level of priority is. For many who purchase Life Insurance it is an important commitment to family that they are leaving them with a lump sum of money to cover items such as mortgage costs but it all depends on your situation. If you do require life insurance you should consult with a specialist life insurance advisor or you could always seek advice from family who would benefit from this cover.