Posts Tagged ‘life insurance uk’
Why purchase a 5 or 10 year term life insurance policy
Not everyone should buy a shorter term life insurance policy.However, there are some good reasons for certain individuals under a specific set of circumstances.
Shorter term life insurance cover is less expensive. The longer the term, the more expensive the premiums.When the period covered is shorter, there is less risk for the insurance company to. Therefore, they are willing to provide coverage for a lower amount. The policy premium will still take into consideration the lifestyle, age and health of the insured. Price alone should not be a determining factor, however, because once the policy term is over, premium rates will go up and it purchasing a thirty year term policy is quite a bit less costly than purchasing three successive ten year policies
A short term life insurance is beneficial when policy holders know precisely when a specific financial burden will be significantly reduced. It is possible to purchase a short term life insurance policy to end at the same time. For example, if your youngest child is a senior in high school and you are well on your way to become an empty nester, you can assume that the costs associated with education, and other related expenses associated will be gone in five years, it is feasible to purchase a policy to cover that period alone.If you are in your 60’s and considering retirement or possibly cashing in some investments, you may want to consider a shorter term life insurance policy. If you are almost finished paying your home mortgage it makes sense to consider purchasing a five, ten or even fifteen year term life cover policy to coincide with the actual mortgage pay off date.
It’s all about timing. Each term life insurance product is designed to meet specific situations and circumstances. Not every Life insurance company offers shorter term life policies. Therefore, consumers who decide that the shorter term option is for them, they may need to shop around to find the ideal policy to fulfill their needs.
A Term Life Insurance Policy
From your mailbox to your television to your child’s take home school notices, someone is telling you that you need life insurance. Most often, the insurance being touted is term life insurance, one of the simplest forms of life insurance available. Term life insurance pays a death benefit to the person or persons identified as beneficiaries if the insured dies while the policy is in force.In order to maintain term life insurance, the policy holder must pay their annual premium, often payable in monthly installments. The premium amount is usually based upon the age, lifestyle and health status of the insured.
· Some of the most frequent questions asked regarding term life insurance are:
· Is term life insurance necessary, and if so, how much coverage do I need?
· Are there special considerations?
· Should I insure myself, my spouse or my children?
Term life insurance is the simplest form of life cover. You pay premiums to an insurance company each month based on an annual premium. If the insured dies during that year, the insurance company pays the beneficiaries a fixed amount as a death benefit. Term Life insurance cover is not an investment vehicle. It will not pay dividends. It cannot be cashed in at the end of the term. The only purpose is to pay a cash benefit to survivors if the insured person dies during the term that the policy is active.
Generally, the insurance company determines the premium based on the age of the insured and the face value of the insurance policy (the amount of money the insurance company will pay upon the death of the insured). Since the chances that the policy holder will die increases as they get older, the older they are, the higher the premium will be. Sometimes there are conditions that will increase the or perhaps even decrease the premium rates. For instance, many insurers will reduce the life insurance premium if the insured does not smoke tobacco.
There are basically 2 types of term life insurance differentiated by the way the premium is paid. With standard term life insurance, premium payments will increase each year or at the beginning of each term renewal. Standard term life insurance is usually the most affordable form of insurance for a young person, but can be prohibitively expensive as the insured ages. In level term life insurance, the premium is guaranteed to remain the same over the life of the term, regardless of age or changes in health. Often, level term life insurance is taken out for periods of five, ten or fifteen years, and is renewable for one, two or three terms. It is more expensive at the outset, but comparatively less expensive in toward the end of the policy term, since the premium is guaranteed not to increase.
Anyone with long term debt should consider term life insurance, particularly if their death will cause a financial hardship for those left behind. This is the only way to be certain that their financial needs will be covered.
Life Insurance with a Group
Does your company offer group life insurance? If not, they might be ignoring one of the most cost effective ways to make their benefits package more attractive to potential and current employees.
Employees have come to expect more than a salary from their employers. In a recent Wall Street survey, participants were asked if they would rather have no pay increase but retain current benefits, or get a raise and see benefits decrease. Fifty six percent of respondents said they would rather keep their benefits and sacrifice an increase in pay. This illustrates how important it is for employers to offer a competitive benefits package to their staff members.
Among the benefits an employer can offer, group life insurance serves as an fantastic way to entice new employees. It also increases the morale of current employees and fosters a better sense of loyalty within the company.
Group life insurance policies can apply to existing or new employee. Family members are often included as well, with a nominal amount being paid by the employee. Most policies also offer extra benefits allowing employees to choose at a discounted rate. This makes it easy for employers to offer more than 1 plan, while paying a minimal amount for insurance premiums.
Group life insurance cover is often less expensive than individual life insurance for several reasons. First of all, group life insurance is a form of collective bargaining.It involves less paperwork for the agents and less time in selling to each individual. These incentives are extremely helpful in order to enable insurance companies to offer lower rates on group life insurance policies.
Employers benefit from group life insurance in a very unique way. There are no mandatory medical examinations in order to be qualified. For some, this is the difference between being able to obtain life insurance and not being able to qualify for coverage. Chronic diseases make getting life insurance hard. The fact that people can obtain life insurance through their places of employment could be enough of a reason to persuade hard working employees to stay in their positions.
Additional Benefits of Group Life cover Insurance
· Since group life insurance is part of wages paid, it is tax deductible. Adding benefits to employee packages improves morale and productivity.
· Many plans offer a waiver of premium benefit. If an employee is totally disabled, they will be able to continue group life insurance coverage without paying the premiums. This is yet another tangible symbol of a company’s appreciation for its employees.
· Employers can customize group life insurance policies to fit company needs. Many plans can be tailored to meet specific employees.
A company’s benefits package is the main attraction to the work force. Adding to it will attract a better, more loyal staff, and help retain the hardest workers.
How Much Life Insurance do I need
The face value on life insurance policies vary from person to person. There are essentially two factors that come into play when purchasing life insurance. The first is the amount of money it would it take for a family to maintain the standard of living to which they currently have and how much a family can afford to pay for insurance premiums each month.
A life insurance policy should depend on the amount of money a family will need to maintain a similar quality of living. This means that there is a certain monthly or yearly income needed to pay for minor and major expenses such a mortgage, cars and education. Life insurance needs vary with each situation.If there are young children in the home, it is safe to assume that they will need funds to support them until they are able to pay their own way. The approximate costs of college education must be calculated and added to their other overall expenses, such as for clothing, food, shelter and other necessities must. In addition, outstanding debts, such as mortgage and car payments must be included. Finally, calculate any additional expenses needed to maintain the same standard of life.
One can consult with a reputable financial advisor to help them construct a viable estate plan to ensure security and stability for their beneficiaries.Even during this time when the markets are unpredictable, financial advisors can help their clients put their money in the investments that will give reasonable returns on their investments each year. An acceptable rule of thumb is to approximate the income taxes on investment returns at 35% to predict yearly income. Divide the annual income by 12 to arrive at an average monthly income. For example, if a family has $8,000 in expenses per month, they will need approximately $3,000,000 in coverage.
This is likely a conservative amount of life insurance as $3,000,000 earning 5% interest yearly equates to $150,000 in annual income.After taxes, the annual income would be around ,000 or ,000 per month.
One should only consider an amount of life insurance cover that requires an annual premium that is affordable. Consumers must be prudent when purchasing a life insurance cover policy. It is essential that they know their limits, because purchasing a policy and having it cancelled because they cannot afford the payments will result in a loss of the premiums invested and their beneficiaries will receive no death benefit.
It is relatively easy for consumers to find that happy medium where they are comfortable with the cost of the premiums and the amount of coverage it provides to sustain the same standard of living for their families.
Please note that this article is informational and not to be considered professional advice.
Do you want to Pay Less for your Life Insurance
Many people feel that they simply can’t afford life cover, believing that it is just an added expense for something they may not even need. However, getting and keeping life insurance is important to ensure your dependents will remain financially secure if the worst happens.It is possible to save money on your life insurance and make it more affordable, without compromising your policy.
As with any other large purchase, you will receive a better deal and get insurance that meets your needs by shopping around and getting several quotes before you make the final decision. There are many websites that will allow consumers to very easily and quickly compare policies from several companies at one time.
Look for no-load or low-load policies that have fewer built-in expenses such as commissions or marketing fees. These policies often have lower premiums without compromising on quality. Look for these types of policies and seek input from a financial advisor. Most financial advisors change a flat fee for their services rather than working on commission like insurance agents do, which typically means that the consumer will pay less overall.
Healthy policy holders are at a definite advantage when it comes to buying insurance. They should not be tempted to put it off as a delay could mean the onset of a chronic health condition that may effect premium rates. Life insurance cover will protect policy holders and their family members for far less it is purchased while the insured is in relative good health. Waiting until health challenges appear will make it impossible to get a low-cost life insurance policy. Consumers who are in good health, should not invest in a guaranteed issue life insurance policy that allows applicants to avoid taking medical examinations. These are considered high risk policies by insurance companies and the premiums are generally much higher than policies that require medical clearance.
If you are in a position where health problems are making it difficult to get cost effective insurance, the best way to save money is to first of all take steps to improve your health and overall physical fitness.Smokers pay nearly 3 times as much in premiums than non-smokers; policy holders who are overweight also pay higher premiums. People with pre-existing medical conditions such as hypertension or diabetes, can improve their chances of saving money by showing that they are responsible when it comes to managing their health.
Life insurance needs change over time. You will need more insurance when you start a family.As the kids grow up and leave the home, need for insurance will be lower. Experts suggest that life insurance policies be reviewed every three years to ensure that your policy fits for your changing lifestyle and circumstances.