Life Insurance Reviews

If you are married, have children, a mortgage or a business then you would normally be advised to take out a life insurance policy. You can choose the sum of money you which to be insured for typically called the benefit amount of the policy. This is generally advised to be enough to cover your mortgage, any outstanding debts and provide for your spouse and children.

The cost of the premium is dependent on a number of factors. These include the amount of the sum assured you require, the length of the contract, and dependent on your current state of health. The insurer would also look at other factors such as height and weight ratios, whether you smoke or not and your family history if known. When applying for life insurance it may involve the provider asking for a medical report from the doctor of the person to be insured. It is important that when filling in the questions on the application form they are answered fully and truthfully as failure to do this may result in a failure to pay out upon making a claim.

Also when applying for life insurance you can choose whether you want the premium to be guaranteed or reviewable. The guaranteed premium is where the payments would be the same price for the term of the policy. The reviewable premium is reviewed every five years and it can stay the same, go down or go up. This is dependent on the insurer taking a number of factors into consideration such as their claims experience, investments and, costs of reassurance.  The review is applied to all policyholders and not on individual circumstances. If the reviewable premium is chosen and it is increased at some point you normally have the option to accept the increase or reduce the amount of sum assured to keep the premium the same.

The insurance would pay out the sum assured when the assured person dies. It also normally pays out on the diagnosis of someone suffering a terminal illness. Normally the diagnosis would mean the assured would have less than 12 months to live. However the terminal illness would not normally apply for most policies in the last 18 months of the term of the contract. The plan has no cash value if you do not pay the premium.

When taking out Life Insurance you need to ensure that you make a commitment to the policy. Therefore this means that when applying for Life insurance you need to be accurate about the information you give and also be truthful to the best of your knowledge about any medical conditions or family history for example. You also need to be aware that if your medical circumstances were to change between the date of applying and the policy being accepted then you would have to make sure your supply this information to the provider. The reason for this is that failure to give such information may mean that the cover does not suit your exact circumstances and may not be appropriate. You do not have to inform the provider if you were to change occupation, however if you were to make a claim your occupation at that moment in time will be taken into consideration when assessing your claim.

When you have given the provider all your information, you will have to decide on your monthly premiums. You can choose from either Guaranteed or Reviewable where the guaranteed premium would stay the same throughout the term of the policy where as the reviewbale premium may change on a five yearly review.

Once you have applied and your policy has been accepted, you should throughout the term of the policy check to make sure that the policy is still relevant to your needs and circumstances. For example your financial situation may change and you may need to either increase or decrease the benefit amount of the policy, therefore if you do not check your policy on a regular basis you may find yourself with not enough cover if your circumstances were to have changed.

Finally you should also know the risk factors involved when taking out a life insurance policy, for example if you were for whatever reason not able to make your specified payment one month you would then have thirty days to update your payments because typically after thirty days the policy will be cancelled.

The main aim for a life insurance policy is to pay a lump sum to the beneficiary of the policyholder on death of the life assured. Some policies have the facility to add critical illness as an added option. Critical illness tends to pay the life assured on the diagnosis of a specified illness but most contracts cover a different amount of illnesses and within each illness the insurance companies will have different definitions to be met, although the regulator normally will set minimum standard to be offered across a set amount of core conditions.

Most insurance contracts will include terminal illness within a life insurance contract but this should not be mixed up with a critical illness contract. Terminal illness would normally pay out if a policy holder was diagnosed as having less than twelve months to live. But you should always check the key features of any contract prior to signing any documentation.

Most terminal illness benefits would not be paid if the policy was in the last eighteen months of the end of the term of the policy. Potential policy holders take out insurance for a wide variety of reasons; however the most common is to cover any outstanding mortgage or loan or simply to pay a lump sum to cover for potential loss of income. Many policies are taken out on joint life basis, however people might want to do this on a single one only. This is one of the nice things about this type of policy as they are flexible to suit your needs.

Firstly throughout the term of the policy if you were to stop the paying the premiums at any point during the policy you will come over off cover and your protection will cease and the policy can never be cashed in as it only provides protection. When taking out a policy insurers should point out any exclusion on the policy, which for example could be suicide and at this point the specific insurer might not pay out. It is also important that when giving your insurer information you do miss any information and complete all forms to the best of your knowledge as there is the risk that they would not pay out.

Also if you have life insurance with a reducing benefit, it is important that the benefit reduces at the same rate as your mortgage, the typical rate is eight per cent so if your mortgage rate is much higher then if you had to make a claim the benefit amount may not cover your mortgage at that moment in time. There is also the option to have reviewable premiums throughout the term of your policy which means that throughout the term your payment premiums make go up, down or stay the same on a five yearly basis. There is no limit as to how much the premiums could go up or down by, however any increase will be fair as it is calculated on factors such as the Retail Price Index (RPI) and the claims history in the past five years.