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If you have a young family to support, or indeed anyone who is dependant on you, it's very probable that you are in need of some life insurance cover. There are various types of cover available. The one you're probably most familiar with is simple life insurance. In the event of your death, a life insurance policy will give financial security for the people who depend on you - who would not only be personally devastated by the situation but could face massive financial problems too.
Put simply, life insurance comes in two forms. One is whole of life, which would pay out on your death. The other form is classed as term. Term policies work on a fixed or pre-arranged period basis. Often these are taken out for the term of a mortgage - very often 25 years - and would pay out if you were to die in that term. The cover ends at the end of the period.
Another type of insurance which could be a real support for both you and your family is critical illness cover. It's not designed for cover in the event your death, but if you were to be diagnosed with a critical illness, from which it's hoped that you will eventually recover. There would be a lump sum pay out on diagnosis and the money would be yours to spend in whatever way you choose. You could clear the mortgage; spend the money on private or supplementary treatment or on modifications to your home. Depending on the condition you could need a modification to your car.
One important point to take into account regarding this insurance is that it's really imperative that you check the small print and find out just which conditions are covered. Some types of cancer are not classed as critical, for example. Improved treatments have improved life expectancy and the result is that some medical classifications have changed.
Some insurers are prepared to accept your application based on your current health, whilst others will want to exclude pre-existing conditions. You need to check all these facts and make sure that you're making fair comparisons.
There's yet another type of cover that could help out if you were unable to carry on with your work because of illness or an accident. Income protection insurance will replace your income once a certain and agreed period has passed. This is known as "waiting time" and the longer you agree to wait, the easier on you pocket the premiums will be. Once payment begins it will carry on until you are fit to return to work or the end date of the policy is reached. This would normally be at retirement date. This would ensure that your commitments could be met during your lifetime but the arrangement would cease on your death.
Accident, sickness and unemployment insurance can also be classed under mortgage payment protection and payment protection insurance. These products will fund mortgage and loan repayments if you cannot work due to an accident, illness or redundancy. After a normal waiting period of a month, payment will begin and it will cover an agreed period - one or two years is typical. There are a number of terms and conditions which will need to be checked out. Again, read the small print carefully and pay particular attention to the unemployment element. If you have been employed by a company for less than twelve months you would not normally be eligible for this.
For advice on which product would be best for your needs your best source of information and advice would be the internet. An independent adviser will offer you comparisons and the best prices. Check it out.
Michael Challiner
Source: ArticleDashboard
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