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Life Insurance - A Beginner’s Guide
When it comes to life insurance we have two primary types of policy
to choose from – term life insurance or whole of life insurance.
Many people find it hard to come to a decision about which type of
policy to take out but the decision you have to make really isn’t
that complex and both will offer good levels of cover for the majority
of people. Let’s take a closer look at your options.
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The most popular type of life insurance is, without a
doubt, term life insurance...
This kind of policy will be set out to last
for a specified ‘term’ – i.e. it will last for a set
time period. So, you can take out a life insurance term policy for 25
years, as an example. During this 25 year period you will make your policy
payments and you’ll have the protection of the policy if you die.
So, your next of kin can claim against the policy in the event of your
death. But, at the end of the 25 years your policy will be finished and
you’ll get no further protection from it.
Many people opt to take out a term life insurance policy because they
know that they will no longer have a great need for insurance at the
end of the specific term. For many people this kind of policy will end
at around the time that they retire so their mortgage will probably be
repaid, their families will be grown and they won’t need to make
provision for their family to have such a large lump sum or income if
they die. So, a term policy can suit them very well indeed, giving them
cover during the years when they really need it and finishing when they
don’t. |
A whole of life policy, on the other hand, will suit those
of us who want protection for the rest of our days. This kind
of life insurance is designed to last until you die – so
you’ll be covered in the short, medium and long term. A
lot of people who opt for this kind of life insurance do so because
it can be set up to help with issues such as inheritance planning,
although many people simply prefer to get cover that is guaranteed
to make a payment at some point so that they feel that they are
getting some return on their policy payments. There is a guarantee
of payment with a whole of life policy that isn’t there
with a term policy. Once your term policy is finished that really
is it – you are only guaranteed a payment if you do die
while the policy is in force.
Many people make their choice here
based on their budget. The fact that a term life insurance
policy may not ever make a payment (i.e. the fact that you
will probably survive your policy) means that insurers can
offer lower costs. A whole of life policy – with its guaranteed payment at
some point – is consequently more expensive. The choice
you make here will be a personal one and may well depend on your
financial circumstances. The vital thing to remember is that
some form of life insurance cover is vital for most of us – especially
if we have a family to consider and we can consequently get great
protection from either kind of policy at the end of the day. |
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About The Author
Micheal
Reese has worked in the life insurance http://www.1tracklifeinsurance.co.uk
industry and specialises in cheap life insurance policy
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