Life Insurance

Life Insurance

There is nothing more precious than life. Not only must we care for ourselves, but the security and safety of our loved ones needs to be taken into account. For example, what would happen if you suffered an injury which prevented you from working ever again? Worst-case scenarios such as a terminal illness or a sudden death are also important situations that we need to face (whether we prefer to or not). These are some of the primary reasons why obtaining a sufficient life insurance policy is critical in this day and age. As this can be somewhat of a complicated subject, let's break it down and examine the basics before highlighting the steps to take in order to obtain the appropriate package.


The Types of Life Insurance

Life insurance can generally be grouped into two different categories. These are:


- Term life insurance

- Whole life insurance


As the name hints, term life insurance is associated with a policy which is valid for a set period of time. Clients can generally choose any frame from between one and 30 years (although this will naturally vary from provider to provider). In regards to term life insurance, benefits will ONLY be paid if death occurs when the plan is still valid. In other words, the user cannot collect if he or she outlives the extent of the term itself. This is the most common type of policy and its rates are generally cheaper when compared to whole life insurance.


While life insurance policies essentially are not limited to a fixed number of years. Even if you live to be 110 years old, your family members can still collect. These policies are also a bit more comprehensive than term policies and they are known to offer a greater sense of flexibility in regards to the stipulations available within each plan. However, the trade-off is that whole life packages are somewhat expensive; a potential concern for those who may be on a limited budget.


Fixed or Variable Rates?

All insurance policies will take interest rates into account, as these are included within the premiums. Fixed interest rates guarantee a set amount of money (in the form of benefits) upon death. Variable rates will depend upon the predominant rates set by the Bank of England. These are therefore somewhat more unpredictable. This is why it is a good idea to speak with a professional advisor in order to determine which option could be your best choice.


What to Keep in Mind in Advance

Your health will obviously play an important role. If you are in poor health or are above the age of 55, term life insurance is likely to be the best option. Also, take into account how much you will be required to pay each month and if this can be deducted from your salary (assuming that you are working). Finally, see how many recipients can be included within a plan. Some providers will limit the number of individuals who will receive benefits upon your death.