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Life Insurance
Life Insurance is used to provide cover for the benefit of a person's spouse, partner or family in the event of their early death. The life insurance payment might be used to repay a mortgage or provide living expenses as a replacement for their income that is no longer being received. Life insurance is regarded by many people as an essential part of their financial planning for the future.
There are two main types of life insurance: protection-only and investment-type. If you simply want to get life insurance cover at the minimum cost, then a protection-only type of term insurance is possibly all that you need. If you want to combine insurance cover with an investment plan that will reward you at some future date, then this is likely to be much more expensive.
Protection Only Policies
Protection-only insurance is also known as 'term insurance'. In its simplest form, it pays out a specified amount if you die before a specified date; if you survive, it pays out nothing. It is the cheapest way of buying the basic insurance cover you need.
Mortgage Protection insurance is special type of protection-only insurance, which is tailored to meet the cost of repaying your mortgage in the event of your untimely death. The cost of mortgage insurance varies according to your age, sex and the type of mortgage. Click here for more information about Mortgage Protection.
Investment Policies
A whole-of-life policy is one example of an investment-type life insurance policy and provides cover for as long as you live. Since the policy must eventually pay out, it builds up an investment value that you can cash in by surrendering the policy, but it can take many years for its value to build up to a significant amount.
An endowment policy is another example of an investment-type life insurance policy. This pays out if you die within a specified period (the endowment period), but also pays out if you survive. On the face of it this may seem attractive, since the policy pays out whether you die or not, but this can be an expensive way of buying life insurance cover.
There are many different types of life insurance policies available from many companies. You can either approach these life insurance companies direct for quotations, or you can use the services of an insurance broker or independent financial adviser, who will be able to assess your personal requirements and ensure that you obtain the right kind of life insurance protection.
NOTICE: A mortgage is a loan that is secured on your home and you also need to think carefully before securing any other debts against your home. Your home could be taken away by the lender and sold if you do not keep up the repayments on the mortgage or any other debt secured on it -if you are in any doubt, seek independent professional advice. These notes are offered as a general guide only and do not constitute mortgage or insurance advice.
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