Life Insurance, the Universe, and Everything

You may have noticed that life insurance is coming back into fashion. It's true that it may not be the financial term on everybody's lips, but sales of life insurance have been going up, according to the Association of British Insurers. Whilst we may not be saving the volume of funds that the financial institutes would like, we are at least flirting with the idea of becoming a little more protective with our finances.

If you have yet to consider taking out any life insurance, don't worry ?there's plenty of information out there including consumer organisations such as which? and moneynet. Start with some simple, easy questions such as:

* Would my dependents need a lump sum, such as to pay off the mortgage?

* Will they need a replacement income?

* Should my partner and I both take out life insurance?

You need to ensure whatever life insurance cover you take out accommodates funeral expenses, an emergency fund to encompass household expenses in the short term, repayment of the mortgage, repayment of any other loans, inheritance tax, bequests in your will to people ? in addition to your dependents, any other possible lump-sum expenses.

Life insurance broadly falls into two categories: term life insurance (protection only) and investment type. Term insurance is the cheapest type of life insurance and provides a pay-out if the person / policy holder dies within a selected period of years. If you survive beyond the given period of years, then no pay-out is given.

Investment insurance advises that you should choose a whole-of-life option which is a form of investment type policy. Whole-of-life insurance provides cover for as long as the policy holder lives. The policy must eventually pay out and therefore builds up an investment value which can be cashed in by surrendering the policy. However, it often takes many years for a surrender value to build up and in general, whole-of-life policies are expensive if your main requirement is protection, the same is true endowment policies. Endowment policies are investment insurance products which pay out upon the death of the policy holder and also if they survive.

If you're considering term life insurance, bear in mind there are multiple variations encompassing increasing term insurance, increasable term insurance, decreasing term insurance, renewable term insurance, convertible term insurance, family income benefit insurance and pension linked term insurance.

Increasing term insurance

Increasing term insurance is just like basic term insurance, except that, as the name suggests, the level of cover increases ? typically alongside the premiums. This policy is suitable for long-term insurance as increasing prices reduce the value of a fixed level of cover over policy period.

Increasable term insurance

Increasable term insurance provides the option of increasing the level of cover either at specific intervals (such as anniversary of policy start date) or specific events (such as marriage or birth of a child). Premiums increase for additional cover, but they are based on your health at the start of the policy, even if it has since deteriorated.

Decreasing term insurance

Decreasing term insurance reduces cover year on year, with the policy holder usually requiring the cover for loan repayments such as a mortgage or to cover a potential inheritance tax bill.

Renewable term insurance

Renewable term insurance gives the policy holder the option to extend the insurance term when it comes to an end; the premium paid is the same at the start of the term, in spite of any deterioration in the policy holder's health.

This may be beneficial to parents whose children stay in full-time education longer than originally intended. Alternatively if someone cannot afford the cover for the period they want, they could take out cover for a short period and extend it later with slightly high premiums.

It might be a financial jungle out there, but it's not impossible to navigate your way through to financial security.

Resources:

http://www.moneynet.co.uk/insurance/life-assurance/index.sht ml

http://www.which.co.uk/

About Rachel:

Rachel writes for the personal finance blog Cashzilla.

http://www.cashzilla.co.uk

Rachel eats a lot of Green and Black's chocolate, particularly Maya Gold ?it's delicious and fair-trade too.

---

Protecting Your Expatriate Family

If you and your family relocate overseas, one of your... Read More

Life Insurance Beneficiaries

Naming a beneficiary for your life insurance policy can be... Read More

Life Insurance Fears Post the London Bombings Tragedy

Following on from the tube train and bus bomb attacks... Read More

Finding Auto Insurance Comprehensive Coverage

You can go online to easily find and quote auto... Read More

Saving on Home Insurance: Tips for Cutting Costs

Everyone is searching for a way of cutting costs, a... Read More

General Knowledge - Critical Illness Insurance

Critical illness can happen to anyone, and often does. If... Read More

Finding Life Insurance Quotes For Adult Children

Shopping for life insurance quotes for adult children isn't any... Read More

Give Your Auto Policy a Tune-Up

When you originally purchased your auto insurance policy, you purchased... Read More

Alternate Risk Transfer (ART) - Insurance Strategies

Risk ManagementAlternate Risk Transfer is a fancy way of saying... Read More

Keys To Controlling The Future of Health Care

Several key changes are necessary to get control of the... Read More

The Great Value Of Accident Photographs

You were humming along on a bright and sunny day... Read More

What is Travel Insurance?

Travel Insurance is designed to protect your health, belongings, and... Read More

Health Savings Account (HSA): How Do I Invest It?

The Health Savings Account (HSA) is an amazing tool that... Read More

Insurance for Car Wash Fundraisers

Non-profit groups in this day and age need to watch... Read More

Auto Insurance In Texas

If you are looking for auto insurance in texas, you... Read More

Life Insurance No Medical Exam - Is It Really Possible?

Quite often you feel that an ad for life insurance... Read More

What Is Renters Insurance Really All About?

Renter's insurance is protection intended for anyone who rents an... Read More

Homeowners Insurance Coverage

When deciding on the appropriate amount of homeowner's insurance coverage... Read More

Is Life Insurance Comparison Really Necessary?

When you want to purchase a life insurance policy, you... Read More

Tips For Lowering Your Auto Insurance Quote

Do you have many claims? If so, you should do... Read More

The Best Rates on Life Insurance

Finding the best rates on life insurance is not difficult... Read More

Auto Insurance Rates

Auto insurance rates will vary depending on the insurance agency,... Read More

Cheap Car Insurance

Finding good car insurance can be very difficult. Here are... Read More

Auto Insurance Basics

Most people only think that insurance is something they need... Read More

Online Insurance Quotes California Auto

Finding insurance quotes for California auto is now pretty easy.... Read More

Is an HSA a Type of Insurance?

A Health Savings Account (HSA) is not a type of... Read More

Is Your Auto Insurance Company Rated?

Several national rating institutions rate insurance companies. Do coverages, rates,... Read More

An Intro To Auto Insurance

Although premiums, policies and prices vary widely, the mandate does... Read More

Student Health Insurance - Is It Necessary?

As a young, healthy college student, it might be tempting... Read More

I Was In An Accident, Will My Car Insurance Rates Go Up?

You were on the phone, got distracted and before you... Read More

Should You Have Higher Deductibles On Your Coverage?

What is a deductible? A deductible is the amount you... Read More

Taking The Mystery Out Of Long-Term Care Insurance

Here's the good news: with improvements in medical technology and... Read More

Guide to Life Insurance

Here is a useful guide to life insurance. Simply put,... Read More