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Life Insurance Advice – Is It Necessary?

 

What is Life Insurance?

Life cover is an insurance product which provides a cash sum if the life assured were to suffer loss of life. The insurance can be taken on a single life assured or joint life assured basis. The policy owner must pay regular premiums to the insurer. Unlike home or car insurance the policy owner is not taking out cover to protect a known valuable of tangible value. Rather the policy owner is protecting the family, mortgage or dependents from the consequences of the life assured suffering death. There are many variations of life insurance/life assurance, each having an alternative purposes for use.

  • Level term insurance
  • Reducing term insurance
  • Whole of life
  • Term insurance

 

A type of life insurance were the policy owner receives cover from the insurance provider on the life assured for a specified number of years. The minimum term is usually 5 years, the policy owner can choose a term to suit his/her requirements but typically 10, 15, 20, 25 and 30 year terms are chosen. Hauser Insurance

Level term insurance
Level term insurance is taken out for a fixed amount of cover say £100,000. This amount remains constant at £100,000 throughout the term of the policy. Therefore if the life assured were to suffer loss of life the payout would be the full amount of £100,000.

Reducing term insurance
Reducing term insurance is taken out with an initial amount of cover say £200,000. The cover amount reduces to £0 over the full term of the policy. This type of cover is an ideal protection for a capital and interest repayment mortgage. If the life assured were to suffer loss of life at some point within the term of his/her mortgage and life insurance term the payout would be enough to clear the balance of the remaining mortgage. Therefore removing this debt for the remaining family.

 

 

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