Insurance Issues From Johny White

Term Life Insurance Benefits:

With term life insurance you pay cover for a predefined term, and are only covered for that term (usually the same term as your mortgage). At the end of that term, you simply walk away. Term life insurance only offers protection for the duration of the mortgage, and is normally of no value when your mortgage is paid off. Term insurance is also cheap, and can even become cheaper over time.

There are also a number of different types of term life insurance to choose from as follows:

• The first is level term insurance, and it is the most popular type of cover. This policy has it’s premium costs locked in for the full term of the policy, so you pay the same amount each month for the entire term of the policy.
• The next form of term life insurance is escalating term cover. This policy can be more expensive, as you pay an increasing amount each year. However, the lump sum payable at death also increases. These are normally low cost policies, and are best suited to younger people.
• Next, we have decreasing term insurance, and in this type of policy monthly payments stay the same, although the amount of cover reduces each year.
• The forth type of term life cover is increasing term insurance, where the pay out on death increases. However, to make up for this increase it will be necessary to increase the premiums from time to time, in line with changing circumstances.
• Finally, convertible term insurance is a type of term life cover that can be converted into an investment/insurance policy in the future. Normally, the value of such investments will be based on your health, at the time you bought the term insurance policy.

Whole of Life Policies:Whole of life insurance covers you right up until the time of your death, providing that you keep paying your premiums. It can give a considerable lump sum to your family when you die, and it normally accumulates in value over the years. Whole of life policies can be more expensive and more complicated than term life insurance. Also, the investment you make can earn some interest each year. Therefore, since your investment generally grows each year, your premiums can actually reduce over time. You may also reach a time where the interest gained covers all the future premiums, which means you may have no more premiums to pay.

Summary:

The decision of whether to buy a term life policy, or whole of life cover comes down to your own unique needs, and circumstances, and what you wish to achieve. The simplest form of life insurance is a level term policy with renewable option. This allows you to buy life cover for as long as you may require it. On the other hand, you might like to consider a policy that grows in value over time, giving you a very nice nest egg which you can benefit from, while you are still alive. Both types of policy have advantages and disadvantages, and that’s why it’s always a good idea to get advice from a competent insurance adviser.