Life insurance can allow you to continue protecting your loved ones financially after you have gone. Modern life is an increasingly expensive business. Many of us carrying large, long-term debts like a mortgage for most of our adult life. This means that an untimely death can be the cause of not just emotional distress for those that survive us, but also significant financial strife. It should therefore come as no surprise that the life insurance industry is so highly developed. Alongside the traditional dedicated insurance industry, there are now many other types of institution such as the high street bank Santander offering life insurance. The resulting competition in the market means that although there can be a bewildering range of options when you start looking for life insurance, there are also some real bargains to be found.
It is important to allow yourself time for some clear thinking when you approach this subject. The life insurance market is too large and complicated for a quick shop to yield the best results. Before you even start looking at the policies on offer, it makes sense to take detailed stock of your financial position.
In general, the type of life insurance that will suit you best will depend on two factors. One is your regular income, and the other is the size and nature of your outstanding debts.
As is the case with most products, you get what you pay for when it comes to life insurance. The most comprehensive and therefore expensive kind of life cover is called whole life insurance, or life assurance. This is typically the kind of cover most people expect when considering life insurance, a policy which will pay out a specified sum on the event of your death. A claim can be made on whole life insurance policies whenever you die, and providing that your terminal event is a qualifying death, the policy will pay out.
All insurance contracts are complicated legal documents, with exacting specifications on the circumstances that trigger a successful claim on the policy. When it comes to life insurance, a qualifying death means that you have not died as a result of one of the specified exceptions, such as suicide or drug overdose.
This means that most people with a whole life insurance policy will eventually die and a successful claim will be made on the policy. The assured nature of this claim is the reason for the product sometimes being called life assurance. Many other forms of insurance, including the cheaper forms of life insurance, cover events that may never happen, whereas unfortunately the end will assuredly come for all of us eventually.
A limited term for the cover provided is the reason that many of the less expensive life insurance policies will never result in a payout. If you survive the term of a term life insurance policy there is no further opportunity for a claim, hence the reason that regular premiums can be offered at a cheaper rate than whole life insurance. Term life policies are an affordable way to cover debts like mortgage, with the length of the term and sum insured set to match the time and money that it will take to pay off the mortgage.
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