What Are the Advantages of Life Insurance Policies?

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Life insurance is a critical part of modern life. Therefore, it is important to make the right choice as to which policy is best for you and your family. In this article, we will discuss briefly some insurance policy options.

Before we discuss the types of policies and their benefits, here are some important pointers. It is important to have life insurance before you make any decision. You should consider if the insurance will cover your debt and your family’s needs after your death.

Where necessary, seek to identify the advantages and disadvantages of having a joint or individual policy. Enquire about the benefits of having a critical illness component to your life insurance. Investigate the consequences of switching insurance. Insurance brokers can sometimes give better deals, so examine your options carefully.

Examine if paying through a Trust will be easier for your beneficiaries. Check the possibility of having a waiver of premium option for any insurance policy you may take out. Take care to list all ailments or medical conditions on any insurance application, as failure to do so can lead to the policy being voided by the insurance company if a claim is made.

There are two general types of life insurance; insurance policies with set terms, meaning there is a time limit to the insurance, for example, ten years. The other type is known as whole life insurance and generally expires after the death of the insured.

Some of the Life Insurance policy benefits

Term Life insurance has a fixed term, fixed payout and fixed premium. The advantage of this policy is the stable premium. The downside is if the insured outlives the policy, there is nothing to gain. Secondly, though it may be renewable, if the insured is found with critical health problems at the time of renewal, the insurance company can refuse to re insure.

Decreasing Term or Mortgage Term Life Insurance is normally connected to the insured’s mortgage payment. As the amount of the mortgage reduces with each monthly payment, the amount insured also decreases at the same rate.

Increasing Term Life Insurance has fixed coverage; however, the premium is increased over time because of inflation or the addition of children or a spouse.

Family Income Benefit means that in the event of the death of the insured, the family will obtain a regular payout from the insurance company. A disadvantage is that if the insured lives out the term of the policy, no one benefits and the policy is not renewable.

In Whole Life Insurance, there is no term limit. Many of these policies are ‘unit-linked’ or ‘with profit’ types of insurance policy with both an investment and insurance element. An advantage is that the profit of the investment is added to the insured amount annually, this is called a reversionary bonus.

Guaranteed Whole Life insurance has the payout sum and premium fixed from the beginning.

Then there is the Specialist over 50s Insurance which is for those over 50 years old. No declaration of medical conditions is required.

When deciding on an insurance policy, it is very important to review the requirements and the advantages and disadvantages of each type of policy proposed. Insurance is necessary so it is important to make the wisest choice as to which insurance policy will benefit your family most.

Sachin is a researcher and a writer. He is presently completing an MSc. in Workforce Education and Development. He offers assistance to university students in academic writing and also covers life insurance advice in the UK.


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