Life Insurance
While many people do not like to deal with the subject, purchasing life insurance is essential to ensure your dependents are taken care of after your death. Whether you leave behind loved ones or valued business associates, life cover can take the financial pressure off the people you care about if you die.
What Is Life Insurance?
Life insurance can also be called life assurance, life cover and term assurance. All of these terms refer to an insurance policy that pays out a lump sum upon the death of the policyholder. Life cover protects your dependents from financial hardship if you die.
What Do “Term” and “Sum Assured” Mean?
The term of a life assurance policy is the number of years it is in effect and the sum assured is the amount paid out if the policyholder dies.
What Types of Life Assurance Policies Are Available?
You can choose from a variety of different life insurance options, depending on your unique needs and how much you can spend. Types of life insurance cover include:
• term offers basic cover for a number of years at an affordable
rate and the policy only pays out if the policyholder dies before the
policy expires;
• level term pays a guaranteed lump sum if the policyholder dies
during the term of the policy;
• decreasing term pays out a decreasing amount over the length of
the policy and is usually tied to mortgage payments to cover this necessary
expense;
• increasing term pays out an increasing amount of the length of
the policy, taking the rising cost of living into account;
• index linked term increases the payout annually relative to the
Retail Price Index;
• whole-of-life guarantees a lump sum payout whenever the policyholder
dies and may build cash value;
• endowment life insurance policies are a combination of savings
and usually decreasing term insurance to create a savings plan and life
insurance policy;
• convertible term gives you the option to convert your policy to
whole-of-life or endowment without new medical information;and
• family income benefit insurance pays out in regular payments like
a salary, instead of in a lump sum payment.
Where Can I Buy Life Assurance?
Life cover may be purchased online, on the telephone or in personal from a insurance agent, financial planner, agent for the insurance company or the insurance company itself. Those selling life insurance must have authorization from the Financial Services Authority.
How Is Risk Involved With Life Insurance Premiums?
Life cover premiums are based upon risk, or the likelihood the policyholder will cash in the policy. Health problems, a poor family health history and high risk occupations or hobbies can all boost life assurance premiums.
What Does Non-Disclosure Mean When You Apply For Life Assurance?
When you ask for a life cover quote, it is essential to answer all questions completely and honestly. If you fail to provide adequate answers, the claim may not be paid as a result of non-disclosure.
How Much Life Assurance Should I Buy?
To determine how much life cover to buy, consider your mortgage payments, living expenses and business expenditures to determine the necessary level of cover to take care of your dependents in the event of your death.
If you have dependents, life insurance is essential to provide for their
needs in the event of your death.