Life Insurance: Help & Hints

If you have a family, its worth considering life insurance. This form of insurance can give you peace of mind that loved ones will be looked after in the tragic event of your death. Its not something any of us like to think about it, but understanding how this type of insurance works could save you money.

Term insurance

There are several different types of life insurance policies on the market and choosing the right kind of policy for your needs can be a difficult task. But we recommend you look first at term insurance. This form of life insurance is temporary and offered by almost all life insurance companies, a number of friendly societies and other financial providers and is more often then not the popular choice.

Term insurance is based on an easy and simple concept, the insurance company guarantees to pay the agreed amount if you die within a given time. If you survive to the end of the policy's term then no benefit will be paid, simple. The term of the policy depends upon the policyholders choice and can be anything from a few years to several decades. Policies can be purchased on either just your life or on both the life of you and your partner. Term insurance is the least expensive form of life cover but be aware that premiums for men tend to be higher as on average they do not live as long as women.

Whole life policies

Most insurance companies also offer a whole of life policy. As the name describes, such policies guarantee to pay the sum assured on the death of the insured person, whenever it occurs.

Because whole of life insurance is not limited to a specific period like term insurance is, premiums are more expensive as the insurance company pays out eventually. When you reach a specified age as stipulated in the policy, usually around 70 or 80, you may not have to pay further premiums but your cover will continue as normal.

What insurance policy?

Term insurance is probably the best policy to choose and the most popular. Though the idea of permanent cover for life sounds appealing, whole of life policies tend to present too many complexities. They tend to be swamped with various charges and many people buy plans in the expectation of building up a juicy investment fund for their own use, these expectations are often fuelled by commission-hungry salesmen but are very rarely fulfilled with many policyholders surrendering their policies early.

Some experts believe that you should never mix your savings and insurance into the same plan, this is exactly what a whole of life policy does. With term insurance you pay your premiums and if you die before your policy expires, it pays benefit. If you survive, you receive nothing. Couldn't be simpler.