Life Insurance Explained

state of the industry

Premiums for life insurance have been decreasing steadily of the past 10 years so the chances are if you already havea life insurance policy then you may be overpaying, perhaps by as much as 50%. There are a few different types of life insurance but this site deals with Term Insurance which is life insurance designed to cover you for a fixed term. This is not to be confused with Whole of Life Insurance or Mortgage Payment Protection Insurance which are services not provided by this site.

 

insurance v assurance

If you are insuring an event which is definately going to happen then it is technically assurance not insurance. As we are all going to die at some point then life insuance policies are some timed referred to as life assurance. In some scenarios though the insurance is for a fixed period of time and as you may not die in that time it is an insurance policy not an assurance policy.

whole of life insurance

A Whole of Life policy is a life assurance policy that is designed to cover an individual for the entire lenglth of their life. The policy will mature when the individual dies and it is in this case that the dependents of the individual or some other nominated person or trust will take the benefit of the policy. The amount that pays out may vary depending on the type of policy purchased. The contributions of a policy holder is invested into an investment fund normally and is reviewed from time to time to ensure performance is in line with what is expected. Normally contributions remain the same throughout the policy but may have to increase to meet expectations.

Whole of Life policies are an regulated product and you should only take advice on one of these products from an independent financial advisor.

term insurance

Term life insurance as the name sugests will cover you in the event of your death over a fixed period of time. If the policy is in force when you die then it will payout the benefit. Term insurance is generally fairly cheap comapred to Whole of Life insurance but unlike whole of life insurance it has no cash value. Term insurance can be either level term insurance or decreasing term insurance. This relates to the amount of benefit that will pay out in the event of your death.

 

level term insurance

Level Term insurance is where the amount of benefit that will get paid out in the event of your death remains the same through the length of the policy.

decreasing term insurance

Level Term insurance is where the amount of benefit that will get paid out in the event of your death decreeases through the length of the policy. This type of policy is often used to cover the outstanding balance of a repayment mortgage.