My Life Insurance Expert
Life Insurance and Critical Illness
Life cover: an apt description
Posted on 22. Sep, 2011 by admin in Life Cover
Life cover might be viewed as one of those rare insurance terms where the description is especially apt – it does just what it says it does. In particular, life insurance, as it is also known, provides cover for your life by offering lump sum payment to your surviving dependents in the event of your early or unexpected death.
It is very aptly described as life cover, therefore, since is offers a way of helping to ensure that your family and loved ones are looked after financially, if you’re no longer around to do so yourself – they are financially covered.
It might be apt and it might be as simple and straight forward as keeping your family covered, but there are nevertheless a number of different variants, including:
- standard term life insurance – just as the name suggests, this is probably one of the most common forms of this type of cover which, in return for what might be considered a modest monthly premium, agrees to pay out a single lump sum benefit to your designated beneficiaries in the event of your death (up to a certain age limit, where the policy then expires);
- mortgage life insurance – this variant is most likely to be familiar to any homeowner buying their house with the help of a mortgage. In order to ensure that any outstanding mortgage balance is repaid if the borrower dies before its maturity, mortgage lenders may typically insist that adequate life insurance is in place as a condition of advancing the loan. This means that you, too, might then take comfort from knowing that your family becomes free of any mortgage commitment and that any balance is fully paid off in the event of your death;
- decreasing term life insurance – this type of cover might be attractive if you have a standard repayment mortgage, where the outstanding balance is of course decreasing over the years. The life insurance benefit payable therefore also decreases over the same period. You might find that the monthly premiums for this type of cover are somewhat more attractively priced than other forms of life cover;
- index-linked or increasing term life insurance – these essentially self-explanatory variants are both founded on a similar principle: namely that the value of the insured benefits vary in line with variations in the retail price index or will steadily increase on a year-by-year basis, thus helping to preserve the real value of your life cover.
