When buying life insurance (also known as term assurance) it is important to weight up the pros and cons to understand whether it is right for you. This list outlays many of the life insurance benefits and other key considerations when buying life insurance.
Peace of mind knowing your loved ones are protected should the worst happen.
Tailor your cover to either remain fixed or decrease over time depending on your needs.
Include critical illness cover protecting you should you suffer a serious illnesses.
Provides a lump sum cash payment on death.
A simple and inexpensive product.
Benefits of Life Insurance
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Peace of mind. knowing your loved ones are financially protected should the worst happen. |
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Terminal illness cover. An advantage of most reputable life insurance policies is that they will make early payment if you are diagnosed with less than 12 months to live, which is a key life insurance benefit at a time when you are unlikely to be able to work. |
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Critical illness cover. Although an additional policy option, adding a critical illness policy to your life insurance can significantly increase your level of cover, providing financial protection if diagnosed with a critical illness. |
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Regulated industry. The life insurance industry is regulated by the Financial Services Authority. This benefit means that your consumer rights are properly protected and there is a set complaints procedure. If you are unhappy with the outcome of this procedure you can also contact the Financial Ombudsman Service. |
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Written into trust. Writing the policy into trust will ensure that your chosen beneficiaries receive the payout quickly and without complication. |
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Tax free payout. The benefits of a life insurance policy are usually free from taxation whether a lump sum or a monthly income in the case of family income benefit . |
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Tailored to your needs. There are a range of life insurance products available to suit all requirements. Decreasing term insurance to cover the likes of a repayment mortgage, level term insurance to cover a fixed sum or even a whole of life insurance. |
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Indexation. An advantage of life insurance policies is that they can be indexed so that they increase in line with inflation over time so the real sum assured does not decrease. |
Negatives of Life Insurance
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Increased premiums for health issues. If you currently suffer from health problems or have suffered them in the past then the cost of your life insurance premiums may well be inflated above normal rates by the insurer to account for the additional risk. |
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Increased premiums for hazardous activities. Premiums may also be inflated above normal rates if you participate in what are considered to be hazardous activities, such as sky diving or sailing. |
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No cash value at maturity. If you outlive the term of your life insurance policy it provides no cash value, one of the main reasons term asssurance is relatively cheap for the level of cover. |
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Premiums will generally rise with age. This often an issue for couples who take out a joint life policy and then find that they need to take out a separate policy at an older age due to separation or the death of one partner. |
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Terms and conditions vary between life insurance providers. It is always important to read the policy wording document or seek life insurance advice. |
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Changing policy terms Altering the terms of a policy, say increasing the level of cover or the term of the policy may only occur due to certain life events, such as having a child or marriage and may well require further underwriting. |
