Great online life insurance advice from Go Direct
Life Insurance
Life insurance is security for dependants of a policyholder and primary earner if something bad happens to him. Online life insurance consultant godirect.co.uk relates that there are different kinds of life insurance.
Money, money, money…..
1) Whole Life Insurance
This type of insurance is more expensive than a level term insurance since there is an assurance that the policy will pay out a lump sum when a policyholder dies. It is a kind of investment because the insurer puts in the premiums you pay monthly or annually in a fund.
2) Level Term Insurance
Among the several life insurance policies offered by insurers, the level term insurance is the lowest priced. Unlike whole life policies, benefits of term policies will be paid to the beneficiaries if the policyholder dies within the fixed period under the policy. It is a level policy since there is a flat amount that will be paid out to the policyholder’s dependants.
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a. Mortgage Term Insurance
This kind of term insurance makes sure you pay off your outstanding mortgage debts when you die, liberating your family from financial burden aside from losing a primary earner in the family. Also called decreasing term insurance, the pay out amount reduces as the mortgage debt lessens.
Insurance and Assurance
Some insurers use the term “assurance,” meaning something is guaranteed to happen such as death. On the other hand, “insurance” means that there is only a risk of dying within the fixed policy term, although there is no guarantee.
Reasons for Buying a Life Insurance
If you are single person without dependants, then you don’t need a life insurance policy. But if you have a family and children, get a life insurance policy. If you think that the financial effect of your passing will not matter to your family, then you don’t have to purchase a life insurance. But if you leave your spouse with the trouble of paying for the expenses of food, shelter, and education of your children without any financial help from a family investment, then a life insurance is very important.
An unwritten rule in choosing a life cover pay out is that each parent must be covered ten times the income of the key earner.
Benefits for dependants should be enough to protect them from financial inconvenience once the main earner dies. The pay out must pay off debts incurred when the policyholder was alive. Although, a large pay out would also mean higher monthly or annual premiums. If your employer offers death-in-service as an employment incentive, deduct the employment benefit from the total life insurance offer.
A life insurance applicant with a young family must also contemplate on purchasing a life cover for a non-working partner since there is also a possibility that if that partner dies, the chief earner may have to stop working and take care of the young children.
Premiums may also depend on the health risks of a policyholder. Insurers charge higher premiums for those who do fieldwork than for those who are tied to the desk. Smokers and excessive drinkers pay soaring premiums because they are more prone to stroke and cancer. Among those with high premiums are extreme sports buffs and those with risky occupations such as race car drivers and skyscraper window cleaners.
Insurers warn life insurance applicants to divulge everything to them so that there won’t be any reason not to pay out your beneficiaries when the time comes. According to a Norwich Union research, among 14 applicants, at least one makes up information on health and way of life.