Life and Critical Illness Insurance

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Customers getting quotes from What Protect cannot believe the results as even those customers with existing insurance policies with other companies will see that over the last few years rates for life insurance have dropped dramatically.

This is because as the technology keeps improving you can now get fast multiple quotes as opposed to spending ages trying to get individual quotes from different insurance companies.

So get fast, free multiple insurance quotes (in under a minute) and see how much you could save.

Take a look at some of the companies competing for your life insurance business:

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Even if you do not have it, you have almost certainly heard of life insurance – after all, well over 18 million people in the UK have some form of life insurance, according to market researchers YouGov.

Popular as it may be, however, it might be useful to review why it has become an important part of households’ financial affairs and just how it works in this day and age.

A brief history of life insurance-

In the UK, life insurance was developed principally by the many friendly societies of the nineteenth and early twentieth centuries. Before the age of universal, government funded social welfare, they existed to help members’ families during difficult times – including the costs of burying the member and the surviving spouse’s need for support.

It is from these beginnings that life insurance also became known as life insurance or death insurance.

Friendly societies became extremely popular, with contributions often being collected from the (mostly male) heads of household at meetings in pubs. Indeed, so popular was this means of providing some degree of support for a surviving spouse, that the Historical Association has estimated that membership of such friendly societies grew to as many as 80% of the male workforce by the beginning of the twentieth century,

Life insurance today

The early principles of life insurance remain as true today – it is a way of providing financial support for the surviving dependents in the event of death.

What has changed, however, is a considerable diversification and choice in the number of different kinds of life insurance – and related cover – it is possible to arrange.

If you have any doubts about the wide range of such insurance products available and which might be suitable for your own needs and circumstances, here at UKinsuranceNET we can help guide you through some of the key considerations and choices.

The following are just some examples of the different kinds of life insurance it is possible to arrange:

Level term life insurance

  • this is perhaps the most common and popular type of life cover and is typically regarded as cheap life insurance compared to other life insurance options;
  • it is based on the very simple principle of the insurer guaranteeing to pay out a predetermined cash benefit in the event of the insured’s death within a given interval of time;
  • that interval is known as the term of the cover and it is described as “level” because the amount of benefit payable remains the same throughout that term – provided, of course, that the agreed monthly premiums continue to be paid;
  • the amount of the guaranteed payout is decided at the outset and this determines the amount that is paid in monthly premiums;
  • the cash benefit may be used entirely as your designated beneficiary sees fit – in the event of a breadwinner’s death, for instance, it may be used to pay off outstanding debts, invested as a source of continuing income, or to ensure the payment of fees for children’s continuing education;
  • it is important to remember that in every example of term insurance, there is no payout at all if the insured survives until the end of the term – payment is made only in the event of death before its end;

Increasing term life insurance

  • a variation on the level term arrangement is life insurance which guarantees a payout which increases year on year as the term progresses – the benefits payable in the final years of the agreed term, in other words, are higher than those at the beginning;
  • the increasing value of any payout may help to meet the effects of inflation over the term of the cover or in anticipation of any survivor’s need for an increased level of support in the event of the insured’s death;
  • naturally, the amount paid in premiums to cover the increased payout needs to be higher than a simple level term life insurance;
  • where the increasing value of the benefits are more specifically related to changes in the rate of inflation, this form of cover may be known as index linked life insurance – the benefits being linked to changes in the inflation index;

Decreasing term life insurance

  • there may also be occasions when the surviving beneficiary might need less financial support in the event of the insured’s death;
  • this might be because of reduced levels of domestic debt (for example, a mortgage), for instance, or the increase in age and independence of surviving children;
  • with a steadily decreasing liability on the insurer to payout on the insurance, it follows that premiums are typically lower than with level term or increasing term life insurance;

Mortgage protection insurance

  • perhaps the most common variation of the decreasing term life insurance is one used to protect a standard repayment mortgage;
  • the outstanding balance on a repayment mortgage, of course, declines over the years and, so, a decreasing term life insurance policy may not only suffice to clear any mortgage obligations in the event of your death but also prove more cost effective than level term life insurance;

Mortgage indemnity insurance

  • it is important not to confuse this insurance with mortgage protection insurance;
  • mortgage indemnity insurance is designed solely to provide a mortgage lender with protection against the possibility of your defaulting on your mortgage repayments;
  • although the sole beneficiary of this form of insurance is your mortgage lender, you may nevertheless be responsible for paying the premiums;

Critical illness insurance

  • the point has already been made that any form of term life insurance pays out only in the event of the insured’s death before the end of the term;
  • but there may be instances where dependents need additional financial support following the interruption of the normal earning power of a breadwinner because of a critical illness – making it impossible to continue to provide the income on which dependents have become accustomed;
  • this form of protection is known as critical illness insurance – and if it is something in which you may be interested, it is important, of course, to understand precisely which illnesses are considered by the insurer to be critical;

Whole of life insurance

  • where term life insurance is arranged on the risk or possibility of your death before the end of a given interval of time, whole of life assurance – also known as life assurance – is based on the fact that your death is a certainty at some time in the future;
  • provided the insurance premiums continue to be paid, the benefits are guaranteed whenever you happen to die;
  • given the certainty of the event, premiums for this form of insurance are typically the most expensive and whole of life policies are typically designed as savings and investment vehicles.

Additional cover options

The above are the basic types of life cover available. Additional options are available such as convertible life insurance, waiver of premium and so on, so seeking specialist advice may make sense. That way you can feel confident you have the product that most suits your protection needs.

Summary

Life insurance has come a long way since its inception by British friendly societies. Policies serve no less important a role in this day and age – and you have the advantage of being able to tailor the type of policy you arrange to suit your particular needs and circumstances.

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For comparing life insurance quotes online, UKinsuranceNET introduces customers to What Protect's comparison site for product and price information. For help and guidance, please call 0800 014 9903 or email enquiries@whatprotect.co.uk

What Protect is a trading style of What-Insure Ltd, who are authorised and regulated by the Financial Conduct Authority (FCA) - FRN 519275.

UKinsuranceNET’s relationships with these companies are limited to that of a business partnership, no common ownership or control rights exist between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites.

*Based on £100,000 decreasing term policy (including terminal illness cover) over 10 years with guaranteed premiums for a non smoker, aged 30.