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Life Assurance Options

Apr 23, 2008
Life assurance cover is probably one of the best things that you can do to ensure that your family is financially stable should you die. It is essentially a policy that is provided by an insurance company and they will then pay your family money either all in one go or in a series of smaller amounts upon your death. Some policies guarantee the payment whilst others will expire. Although it is quite a morbid topic, it really is worth getting yourself a good policy.

Of all the types of life insurance available, term life assurance will be the least complex and offers you with basic cover over a period of time. Regular premium payments are needed and then this pays out upon the death of the policyholder. Should the holder of the policy still be alive when it expires then no payment will be made. Details like your age, how healthy you are and what your lifestyle is like and in some cases your occupation are all key. With this type of policy you also have an option of paying extra premiums upon diagnosis of a serious illness.

Critical illness cover includes any debilitating conditions, with the cover paying the sum in one go upon diagnosis. Critical illness policies vary between basic coverage to more complex policies that cover a more widespread range of conditions. Make sure that when you take out this policy you give a full medical history and do not omit any important information as this can severely affect the terms of the policy.

Level Term allows you to provide for your family and will pay a lump sum upon the death of the policyholder during the policy. The amount that will be received is guaranteed and does not change, but should the policyholder outlive the term of the policy then no payment is made. Family income benefit allows for a different payout; providing your family with regular payments over a set time. With this type of policy you select the length of the term beforehand, so that if you die with five years left on the policy, it will pay the benefit to your dependent for five years.

A decreasing term assurance policy sees the pay out amount decreasing throughout the life of the policy. Whole-of-life assurance guarantees a lump amount when the policyholder dies, whenever that is. This type of policy tends to be more expensive as the payout on this type of policy is nearly guaranteed.

An endowment policy is a savings scheme that has life assurance attached; they tend to go hand in hand with mortgages and will pay out a sum at the end of the term plus returns so far or upon death before if the policy is still active. An endowment policy is often taken out with decreasing term assurance.

Convertible Term assurance, converts a term policy to either a whole-of-life or an endowment assurance at the end of the policy and you will not always have to provide new medical details for this life assurance.
About the Author
David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best deal on their life insurance, critical illness cover and home and motor insurance.
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