Author: Craig Rad

A life insurance is what makes us more responsible and offers a glimpse on how rational we are because it is a proof of how much we understand the financial planning. A life insurance is what makes the connection between you, the high-minded and responsible person, and the life insurance company, the company that makes sure that what you have will be the will for your dear ones.

When it comes to the life insurance tips, one of the most important aspects is that even though the price is very significant, it is not as important as the terms and the conditions that the contract involves. This is probably the most vital aspect of any sort of contract. In order not to get duped, make sure that you carefully read what the contract contains right before you sign it. If necessary, and it is advisable, ask you lawyer or hire a lawyer who is specialized in the field of the life insurance in order not to be sorry later for having made a wrong decision.

The life insurance contract refers to your agreeing of paying money on a regular basis, called the ‘premium’, and the insurance company, in its turn, will pay an amount of money in the incidence of your death or in the case of some other incidents that might happen while the policy is still available, still in force. But be careful because the life insurance company will pay only for the damage that is stipulated in the contract. In the case in which, for instance, you break your leg, but the contract does not mention that the life insurance covers the expenses needed for the hospitalization or for the medication required in such a case.

Another important life insurance tips refer to the fact that you must keep in mind the fact that all contracts have their terms, conditions, exclusions and limitations. There are also two very important types of life insurance, namely a fairly simple one that does not involve too many details, and another type of life insurance that contains more complicated and complex legal-financial issues.

All in all, here’s a sum-up of the most important life insurance tips. First of all, read carefully the terms, the conditions, the limitations, and the exclusions of the policy before you accept it. It is useless to contest a policy after you have signed it. Second of all, make sure that you clarify any ambiguity in writing, not only in a verbal mode. Do not forget that even if a policy seems to be “simple”, this does not mean that the content of the contract is that simple or that any aspect related to it can be easily solved.

Author: Michael Challiner

The average man in the street assumes that Life Insurance and Life Assurance are names for the same form of insurance. How wrong they are! But don’t hang your head in shame, many financial commentators get it wrong too! Life Insurance and Life Assurance perform different financial roles and are poles apart in cost - so it helps to surf for the correct product.

Life Insurance provides you with insurance cover for a specific period of time (known as the policy’s “term”). Then, if you were to die whilst the policy is in force, the insurance company pays out a tax-free sum. If you survive to the end of the term, the policy is finished and has no residual value whatsoever. It only has a value if there is a claim - in that context it’s just like your car insurance!

Life Assurance is different. It is a hybrid mix of investment and insurance. A Life Assurance policy pays out a sum equal to the higher of either a guaranteed minimum underwritten by the policy’s insurance provisions or its investment valuation. The value of the investment element is then a reliant on the Insurance Company’s investment performance and length of time you have been paying the premiums.

Each year the insurance company adds an annual bonus to the guaranteed value of your life assurance policy and there is normally an extra “terminal bonus” at the end. Therefore, as the years go by your life assurance policy increases in value as the investment bonuses accumulate. The value of these bonuses are then determined by the insurance company’s investment performance. Once investment value has been assigned to the policy, you can cash it in with the insurance company. However, most people get a far better price for their life assurance policy by selling it to a specialist investment broker rather than cashing it in with the insurance company.

If you were to die during a Life Assurance policy’s term, the policy pays out the higher of either the guaranteed minimum sum or the accumulated value of the annual investment bonuses. However, if you are still living when the policy terminates, you usually get a bigger payout. This is because with most insurance companies, an additional terminal bonus is awarded.

There is a also a specialised form of life assurance called “Whole of Life”. These policies remain in force for as long as you live and as such, have no preset term.

There is also a practical difference for the internet user. Whereas you can buy life insurance online, the Financial Services Authority view life assurance as fundamentally an investment product. As such they believe it is best suited to being sold by a Financial Adviser with advice based on the Advisors full understanding of your personal details. Therefore, you will be unable to buy life assurance online. However, you can use the internet to find a suitable financial adviser with whom you can meet and discuss your requirements.

What are Life Insurance polices and Life Assurance policies used for?

Life Insurance is usually a focal point of the family’s financial protection. It is ideally suited to ensure that known debts such as a mortgage, are repaid in full in the event of the policyholders death.

When it comes to providing a lump sum for general use in the event that the policyholder were to die whilst the policy was in force, either life insurance or life assurance can be used. The differences are that with life insurance the size of payout would be preset whereas with life assurance it would depend on the guaranteed minimum and the insurance company’s investment performance. But remember, at the end of the policy’s term life insurance is worthless, whereas life assurance should payout a sizeable investment sum. In this context Life Assurance seems far more worthwhile but in practice more people elect for life insurance. Why? It’s a matter of cost. Life Insurance is considerably cheaper than Life Assurance. Furthermore, in recent years, investment returns on Life Assurance policies have fallen significantly and many insurance companies have placed penalties for cashing in policies early. This has adversely affected the resale value of Life Assurance policies.

Author: Michael Challiner

How can any one know what’s around the corner? It’s probably something you’d prefer not to dwell on, but accidents and fatal illnesses can happen, with the result that your family could be left to look after themselves. Apart from the shock and distress suffered by them, there is the financial aspect. Could they deal with the financial commitments and any debt without your income? This is where life insurance can give you and your family peace of mind that, should the unthinkable happen, at least they could cope financially.

The good news is that the cost of life insurance has become much more affordable than it used to be, particularly the most common form, which is “term insurance”. Term insurance is designed to pay a cash sum if you die within a certain period or term. This is specified at the outset of the insurance and can cover you for whatever period you specify. The policy will have an expiry date and if you survive to that date, the policy ends.

Quite simply, a level term policy is one which pays the benefit on death. The benefit remains constant throughout the term. This type of policy is often purchased to cover mortgage or loan repayments, quite often in conjunction with interest only mortgages. These are becoming increasingly popular, but as they don’t reduce over the years, this type of cover is worth considering as your mortgage is always covered.

Then there are the increasing and decreasing term insurances. With an increasing term (or indexed) policy, the amount paid out will rise in line with the rate of inflation, although this may be reflected in the cost of the premium.

With a decreasing term policy, the amount of benefit which would be payable on death reduces annually, until there is a zero amount left at the end of the term. Often this would be used in conjunction with a repayment mortgage, where the capital value is reduced over the mortgage term. The cost of a decreasing term policy is likely to be less than with a level term one.

There are two ways in which policies pay benefits - either by one lump sum paid out to your beneficiaries or alternatively as a family income benefit. With the family income benefit your dependants receive a set amount per annum until the end of the original term.

Family income policies are often timed to coincide with the time when the youngest child is expected to become independent. The premiums tend to be lower than with a lump-sum policy due to the fact that should the insured person die towards the end of the term, the insurance company would only have a relatively short number of years in which they would have to pay out the annual sum.

It’s worth checking that you’re not already covered by your employer for some form of life cover. Some companies provide death in service benefits. These could pay out two to four times your basic salary.

When doing your sums on the amount of cover you’d need, it’s usual for an average family to cover both parents for around £150,000 per child, assuming there is some death-in-service benefit. If you’re planning on a family income benefit, then it’s suggested that you go for £20,000 plus per child per year.

It is recommended that couples should take out individual life insurance. There is little difference in cost, but where a joint policy pays out only once, on the death of the first partner, with an individual policy each partner is covered.

The benefits of life insurance are invaluable to your family. If you’re no longer around to care for them they’ll be guaranteed financial stability.