Life Insurance In A Nutshell

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2008-09-23 Word Count: 481 Category: Finance

Very few people like the prospect of organising their life insurance. It's a social reality that arranging a life insurance policy is generally left until as late in life as possible, however there comes a time in life when most of us begin to consider what will happen to our loved ones should something happen to us. By taking out a policy you are essentially paying for peace of mind that in the event of your death the people you care about will be financially looked after. The amount paid out is dependent on the type of cover that you choose but, generally, the more you pay on a monthly basis directly corresponds to the eventual payout.

Factors that affect the price of a monthly premium include your age, state of health (if you have any pre-existing medical conditions), your occupation and whether you are a smoker. The most common type of cover pays out a cash lump sum in the event of your death but there is also the option to have the benefit paid on a monthly basis, thus providing a stable income for the remaining family for years to come. There are other options available including a mortgage option, where the insurer pays off all or part of your mortgage if you die or get a critical illness while you are covered. There is also the option for joint cover with a partner, often at a reduced rate.

A key decision that will need to be made is whether you will opt for investment life insurance or term life insurance. The key difference between these options is that the first only pays out if you die within the time specified in the policy (for example thirty years cover) while an investment option, such as an endowment policy, will also pay out a sum if you survive to the end of an agreed policy. The deciding factor of which to take is likely to be down to the price. Policies that cover for the eventual death of the insured tend to be more expensive, but because they guarantee a payout you could think of it as more of a savings scheme than a gamble. In a traditional policy if you survive to the end of a fixed term policy your monthly premium has brought you nothing but peace of mind, whereas an endowment policy guarantees you a cash sum when your policy expires.

Incentives intended to entice you into a life insurance police have become more appealing over time. To change its image as a rather morbid subject some providers have introduced offers such as discounts on gym membership to customers who take out a policy. If you're not taken in by these promotions and are just looking for good, cheap life insurance then there are plenty of providers offering just that on the web.

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Life insurance cover is an easy way to help protect your family financially. We offer value for money life insurance, which includes terminal illness cover at no extra cost. Find out more about Legal & General's life insurance online.