What will happen to your loved ones after you die? Will they be able to support themselves? Can your spouse manage the mortgage payments and ensure your children are able to attend university? Arranging life assurance cover is the best way to ensure your family is taken care of in the event of your death, giving both you and them peace of mind.
Put simply, life insurance (also known as 'life assurance' or 'term assurance') is a policy that pays out a lump sum in the event of the policyholder's death. Policies vary widely; some may guarantee a payout, others expire after a certain period of time. Some have premiums and payouts set in stone, while others offer more flexibility.You pay premiums to an insurance company usually monthly or annually and in return, the insurance company will pay an agreed amount (the ‘sum assured’) if you die during the term of the policy.
Life insurance can be used to repay a mortgage or other debts to provide financial security for your family if you die. It can also be a form of savings in the long run if you purchase a plan, which offers the option of contributing regularly. Additionally, a little known function of life insurance is that it can be tied in with a person's pension plan. A person can make contributions to a pension that is funded by a life insurance company. These are considered private pension arrangements.
This is the simplest and cheapest type of life insurance, and is known as term insurance because you choose how long you're covered for, say, 10, 15, or 20 years (the term).It only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out on the first death only during the term.
Whole-of-life insurance pays out an agreed sum when you die, whenever that is, as long as you are still paying the premiums.
A serious illness, such as cancer or heart attack, affects one-in-four women and one-in-five men before retirement age. Critical illness insurance is designed to ease the financial pressures by paying a tax-free lump sum if you become seriously ill or totally disabled.
Originaly known as dread disease cover, critical illness insurance pays benefits on the diagnosis of certain specified critical illnesses. The range of diseases covered has increased to more than 30, though contracts differ from one company to another.
Critical Illness Insurance can be taken out separately or as an additional benefit on a Life Assurance policy. It is designed to pay out a lump sum in the event of being diagnosed with a critical illness such as cancer, heart attack or a stroke. This type of plan will pay out if you are diagnosed with one of the specified critical illnesses or disabilities listed on the policy during the period of cover.
It is vitally important that you are honest and give the insurer the most complete information you can when applying for health related insurance.