Walker Jack Consultants

There are two main types of life insurance; term insurance (also referred to as term assurance) and whole-of-life Insurance.  However, within these two bands there are many different options that vary between insurers, depending on the situation of the person being insured.

Term insurance is usually the simplest and cheapest form of life insurance.  A person is insured for a certain amount of time, for example 10 or 15 years, and pays regular premiums.  If they die within that term their beneficiary will receive a lump sum.  If they live for longer than the term then nothing is paid.  Some insurers may include clauses that allow the policy to be extended, but this is not typical of term insurance.

Whole-of-life insurance covers a person for the rest of their life, rather than for a limited number of years.  It tends to be more expensive than term insurance but may be useful for someone who has someone dependent on them right into old age.

Most life insurance policies pay out a lump sum upon the person’s death.  However there are opportunities to set up a family income benefit, which will pay the beneficiary in instalments as a replacement to a regular income rather than in one lump figure.  There are other options which allow the insurance to be flexible or tailored to specific needs, such as terminal illness benefit which allows the money to be paid out before death.

Different insurers will offer varying features to their life insurance policies so it is worth researching, shopping around and getting professional advice in order to find the policy which suits you best.

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Life insurance policies are highly useful for covering the expensive funeral costs when a loved one dies.  There are different types of policy to buy, and the quote you receive depends on your personal circumstances.  Although it is recommended to buy a policy if you have dependents or a next of kin who may struggle to pay your funeral costs, it is also possible to take out a policy for a child.  This is becoming particularly popular because when the premium expires you may use it to cover living costs (e.g. University fees). 

Most life insurance premiums are paid monthly or annually over a period of twenty-five to thirty years.  In the case of children’s life insurance, the policy is often paid up until the child turns eighteen or twenty-one and then the insurance company will pay out.  Once the policy expires, the money can be put into investments or college fees.  A number of parents are taking this type of life insurance out when their children are very young so that the child may have savings.  Although a lot of people take these policies out for this reason, it means that another life insurance policy will have to be taken out to cover your children in the event of their death.  Children’s premiums are much cheaper to pay than adults because the older you get, the higher the risk you are to the insurance firm.  It is always a good idea to research different insurance company quotes before deciding which company is for you.

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There are a number of optional extras, which are often available with life insurance policies.  They should be considered carefully, as some of them could be very beneficial to you.

Critical illness cover is an extra that is commonly found on life insurance policies.  This will give you a payout if you were to be diagnosed with a life threatening illness, such as a stroke or heart attack.  The cover is designed to apply for a number of different conditions, but each policy varies, so it is a good idea to read the small print.  Often, the policy will pay out if you are still able to carry out at least some degree of work and the money can be used as you wish.  For example, you might decide to pay off a mortgage or other debts. 

Guaranteed premiums are offered by most insurers and are a good idea for anyone on a budget, as it means that the amount you pay does not change.  Reviewable premiums can go up, as well as down in value, so may not be a good idea in the long run.

Terminal illness cover will give you a payout if you are diagnosed with an illness and told that you have less than 12 months to live.  The level of cover provided varies from insurer to insurer.  

Waiver of premium is an option that lets you opt out of payments if you are unable to work.  If you select this clause you may have to pay a little extra, each month, to cover potential missed payments due to illness or injury.

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Even today, many people do not believe that life insurance is essential and instead see it as just another unnecessary expense.  Less than half of adults in the UK have some form of life insurance, but this could be a problem for their loved ones after they have gone. 

Life insurance helps to ensure that your family is taken care of after you have died.  Most people have a mortgage and other bills to pay and in the event of your death these debts are often passed on to your next of kin.  By ensuring that you have adequate life insurance cover, your mortgage could be taken care of, so that your family will always have a roof over their heads. 

Another benefit is that for the return, life insurance is a relatively low cost item.  Some insurers can cover you for as little as £5 per month and for that you have the peace of mind of knowing that your family will be provided for if anything should happen to you.

Some life insurance policies have extras built in, such as critical illness cover.  This means that if you were to contract a life threatening illness and be unable to work, you would receive a payout that could help you pay the bills.  Extras such as this may cost a little more, but they are worth considering for the peace of mind they bring.

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There are a number of ways to ensure that you do not pay over the odds for life insurance.  Perhaps the most obvious is to make sure that you do not leave it too long before taking out a policy.  It is a simple fact of life that the older you are the more you will have to pay.  Anyone who is in their 20s will find that they can get a good policy for less than £1 a week. 

Secondly, if you live a healthy lifestyle you will enjoy cheaper premiums.  So, if you do not smoke, are not overweight and are reasonably fit, your premiums will be lower than those paid by a friend or relative who is roughly the same age, but who drinks, smokes and does little exercise.  You should ensure that you are completely honest when completing the policy application form, as incorrect information could invalidate the cover. 

Shopping around is the best way to find a cheaper policy.  As some brokers work on commission they will try to steer you towards policies that benefit them rather than you.  By using comparison websites you can readily see the differences in the price of policies offered by a range of insurers. 

If you are considering purchasing a joint life insurance with your partner, you may want to think again.  A joint policy is not a cost effective option, because it will only pay out when one of you dies.  Though separate policies may mean that you pay two premiums each month, your dependents will benefit from two payouts. 

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The stresses of modern life have left many people with mental health problems.  Some of the primary problems include depression, anxiety and panic disorders.  Although these problems may or may not be life threatening, they can affect a person’s ability to get good life insurance.

When life insurance companies ask for medical records and diagnoses, they are often looking for conditions that could shorten a person’s life and cause policy payout.  Diagnoses of mild depression, such as dysthymia or seasonal affective disorder may not be worrisome to a life insurance company.  The same is true for anxiety disorders such as generalised anxiety disorder.  However, a diagnosis of major depressive disorder can trigger a deeper investigation.  Suicide attempts or suicidal ideation are often problems for insurance companies.  Since medical records include prescriptions, a high dose of an antidepressant or anti-anxiety medicine may cause the company to look further into the issue.

The further back the depression diagnosis is, the less effect it has on an applicant’s ability to receive life insurance.  If the applicant is currently in the throes of depression or has just recently recovered, the company may decline coverage until the applicant is in a more stable state of mind.  Other companies may have exclusions in their policy.  In fact, many life insurance providers do not payout if the policy holder commits suicide, since it can be seen as an intentional way of getting out of financial problems.  Different life insurance companies have different policies, and anyone with questions should consult with each company separately.

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Any financial decision that is made warrants a careful thought process.  This applies to life insurance as well.  When evaluating life insurance needs it is important to consider what type of insurance will best fit where you are in life and which type best fits your particular needs. 

The two most common life insurance products that are standard in the industry are “whole life” and term insurance policies.  The “whole life” insurance policy has been a standard in the industry for many years.  This type of policy generally provides lifetime coverage for the individual with the premium being paid up until death.  Some companies allow premiums to be paid until a certain age and then waive the premiums beyond that point.  If an individual requires a life insurance policy that guarantees a set premium for life then this is the option to choose. The “whole life” policy was the standard in the industry until another type of life insurance hit the market—term life insurance.

Term life insurance is more affordable than whole life insurance.  It provides some attractive alternatives to those that may only need insurance for a limited time or possibly want to pay a lower premium.  Term insurance can cover whatever period the customer requires for example the outstanding term of a mortgage.  A potential disadvantage of this type of policy is that at the end of the term the individual may need to sign up for another term to continue coverage.  Since the policyholder would be older at that point the cost of the policy would increase.  The term life insurance policy only pays out if the policyholder dies during the fixed term.

As with any insured decision it is always best to check with a professional insurance advisor.

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When looking for a life insurance policy it is very important to shop around because it is very possible to save money when buying a policy.   After doing your research and determining what kind of product to buy there are several factors to look at before the next step is taken.

Make sure the company is financially sound and has a high rating from independent organizations.

Companies that sell life insurance organize their prices in different classes such as “preferred (non-tobacco),” “standard (non-tobacco),” “preferred (tobacco),” and “standard (tobacco).”  Other people with health conditions or history of medical conditions may not qualify for a standard rate and would be placed into a class called the “impaired risk” or “non-standard rate”.  You may find that one company will offer you a lower premium than another as different companies may allocate the same person to different insurance classes.

Another opportunity for possible savings is found by looking into group life insurance.   This option could be offered by your employer and offers substantial savings over an individual policy.  Make sure to review the group premium and the benefits to determine the amount of coverage provided and compare it to an individual policy.

Try to find out what insurance class that you would be allocated to as this will have a determination on the amount of the premium that is charged for your life insurance policy.  If you are a smoker, overweight or in bad health, you can expect to pay a higher premium.  To qualify for a more favourable insurance class then it would help to stop smoking and exercise regularly.  Such changes will help you reap both health and financial benefits.

Use these tips to help you save money on life insurance and get the best possible policy to fit your needs.  Talk with a professional agent or financial advisor, as they may be able to help you make the best decision.

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A home is likely to be the biggest investment you will make in your life, and for many people purchasing a property also represents the greatest commitment to a debt they will ever make as they take out a mortgage to cover the cost of their home.

Everyone makes paying their mortgage a priority, ensuring that their home is kept safe and secure for their family’s sake – but what happens if the major bread winner in a household is suddenly no longer there?

In the event of a death, households can find themselves suddenly struggling to keep up payments on their mortgage, or failing to do so and facing the repossession of their home at a time when their life is already in a state of major upheaval.

After losing a loved one the last thing a family needs is to lose their home as well, which is why it is important for anyone taking out a mortgage to also invest in mortgage life insurance.

Mortgage life insurance pays out a lump sum in the event of the death of the policyholder – usually one that is commensurate with the outstanding amount left to be paid on a home loan.

This enables the person who is now responsible for the household to pay off the mortgage and relieves them of a large worry at a stressful time in their life.

Taking out a mortgage life insurance policy is a way to secure the future of your loved ones even when you are no longer there to look after them yourself.

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When considering life insurance one question that most people will be forced to ask themselves is: “How much life cover do I need?”  While there is no way to put a monetary value on one’s worth, this is an important consideration for anyone looking into purchasing a life insurance policy.

Taking into account that premium charges will be commensurate with the agreed payout sum in the event that the policy is claimed upon, anyone looking for life insurance should think carefully about what is a realistic amount of life cover for their own family’s needs and future expectations.

A base line when calculating how much life insurance cover is necessary for any given policyholder is to look at the amount that could be left outstanding on their mortgage in the event of their death.

A minimum life insurance policy should cover the remaining outstanding debt secured against a home in order to ensure that other members of the household can retain some stability after suffering a loss.
With the mortgage covered other things to take into account when calculating the amount of life insurance cover that is needed include funeral costs, other outstanding debts and future expenses that the policyholder would, in normal circumstances, have covered from their own earnings.

For example, parents may wish to include the cost of ongoing education for their children in a policy if they are the major bread winner in their household, and may wish to provide the running expenses for the household for a period of time in order to allow for their partner to adjust before the breadwinning burden falls on their shoulders.

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