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Life Insurance - Who Needs It?

Life Insurance coverage provides either a lump sum or an income on the untimely death of an individual. Therefore, anyone who's death would create a financial loss to another has a need for life insurance cover. This could/should include the following: -

Parties to a Mortgage or indeed a loan (mortgage life insurance cover)

Anyone with dependents (whilst a parent may not work, surely there would be a financial loss if anything were to happen whilst there are young children to be cared for)

Key Individuals. Where a business would suffer financial loss on the death of an essential employee.

In essence, any situation where monetary loss would be incurred could possibly have a need for life insurance coverage.

According to the United Nations World Population Prospects report, approximately 7,452 people die every day in the United States. In other words, a person dies in the US approximately every 12 seconds

Types of Coverage:

Term Life Insurance

Term life insurance is as it suggests taken out for a specified number of years at outset. With this type of policy, you are merely paying for the cover provided based on your age, health and the term. Therefore, it is important to obtain the most competitive term life insurance quote for the cover provided. It is possible to take out term life insurance that will pay level lump sums, decreasing lump sums (mortgage life insurance cover) or regular payments (income).

Whole of Life

As the name suggests, potentially, this type of policy will provide coverage through an individuals life time. However, when obtaining a whole of life insurance quote, as well as level of premium there are other aspects to be considered, such as investment performance, effect of charges, financial strength of the company.

Which one?

There are good arguments for both type of policy. We would suggest that the following could make up the main considerations: -

Cost - Whole of Life insurance, as a rule of thumb is usually the more expensive type of product.

Period that coverage is required - If coverage is required for a specific period i.e. a Mortgage then Term cover could be more appropriate

Future Plans - If, for instance a family is planned, then whole of life can offer the flexibility to increase coverage for this or other like events.

Note

Critical Illness (CI) now provides an equally important benefit and we would strongly recommend that you view the CI Fact-

sheet.

Conclusion

This article is meant merely as a rough guide to the needs and options surrounding Life Assurance. It is by no means a comprehensive outline to anyone’s particular requirements. It would be, therefore, wise to use this as a guide and seek more comprehensive advice, via a professional Independent Financial Adviser. All advisers are Regulated and Authorized by the Financial Services Authority (FSA) and are now required to explain their status to you (either independent and fee charging, independent but paid by commission only, or tied)

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