Joint Life Insurance
A lot of people are realising their life insurance needs at the moment, the reason for this being that it is a relatively cheap form of insurance that offers a sensible form of protection. Many people are undecided when they buy the insurance as to what the best way to do it is. If you are in a relationship or you have joint debts then it is always a good idea to see if some joint life insurance will suit your needs best. The joint life insurance plan will often be sold be the insurance companies on a joint life first death basis. This means that the both of you are insured under the plan, however if one of you were to die during the policy term, then the plan would pay out. This could potentially leave the surviving member without cover. If you think this form of joint life insurance is not going to suit your needs because of this then you may want to consider taking two single life insurance policies instead. Two single polices will be more expensive than a joint life insurance plan, however you would get double the amount of money paying out on them if you both were to die during the plans term.
Life Insurance Needs
When looking at your life insurance needs you should also consider writing it into trust. This is normally a free service offered by the insurance company and can help save you money in some cases. The money it can save you, is in the form of inheritance tax, if you do not place the plan into trust then it can go into your estate and be taxed at 40%. If you place it in trust it can bypass your estate and go straight to the beneficiary. You will normally have to ask for this service as it is not done as standard on many plans, however it is normally free of charge and relatively easy to complete. If you do find yourself struggling with the forms, your financial adviser should be able to offer all the guidance you want for your life insurance needs.
Protecting your family with a level of life insurance might not be on the top of your list, but especially if you have dependents, it should be. Is life cover really necessary? None of us can predict the future, but the one thing most people want to be sure of is that their children, dependants, and family members are taken care of should the worst happen and a critical illness or accident ends a life prematurely. With life and illness cover you can see to it financial worries will be the last thing your family needs to worry about in the case of premature death. The roots of level life cover go back centuries, when Romans formed “burial clubs”, or groups of people who would share the expenses in the case of unexpected deaths and paid for participating member’s funerals plus help the surviving family. The expense was less of a burden by sharing it with all members. The practice lapsed with the fall of the Roman empire in 450 AD, but was again reinstated in England in the mid 17th century. Groups were formed, and paid a premium. In return, should a member die, the group would take care of all the burial expenses and provide a benefit for the member’s remaining family, spouse, and children. This was the basis for level life cover as we know it, although there are many new options today to help meet the needs of growing families. Some of those options include not only life and health cover, but income protection, life and critical illness cover, and mortgage security. The level of life cover is completely your choice, which gives you the opportunity to choose the most appropriate level of life insurance for your family’s unique needs. Below are some options you’ll need to know in order to help you make your decision:
Level term life assurance: In insurance parlance, assurance is the certainly of an event while insurance implies the risk of something happening. Death is assured for all of us, thus level term life insurance is life assurance. This is an inexpensive option for small families, or if you have dependents, to provide for surviving members in case the loss of your income and contribution would financially handicap the household. Level term life assurance provides you with financial protection for a set number of years, or “term”. Terms can extend until age 89 for most policies, renewable every five years. If you die or are diagnosed as terminally ill before the term expires, your family then receives a lump sum to help with finances. Generally, the younger you are when you purchase this level of life cover, the less expensive the premium. Therefore, early planning when beginning your family can pay off big dividends in the event of a premature death or illness.
Joint life insurance: In the case of parents of small children or spouses, joint life insurance means both parties are insured on the same policy, and the policy pays out upon the death of the first member. Once the first payout is reached, that is the end of the policy. The surviving member must then seek other level life cover.
Life and critical illness assurance: Not only can you provide in case of death with a life and critical illness assurance, you can also provide in case of a critical illness. This option will cost more in premiums, but it’s worth it if you suffer from a critical or terminal illness and still have family obligations and liabilities. The sum is paid out upon a qualifying diagnosis, and this gives you the opportunity to make arrangements as you see fit.
Mortgage payment protection: This is an option available which is specific to the mortgage on your home and can be added to most any level of life insurance. The level of life cover can protect and provide a lump sum, but a mortgage payment option can also be included above and beyond that. This is also a good candidate for the joint life insurance, as should one parent or partner pass away the family home is specifically protected and paid for under a level term life assurance.
Which is the life assurance for you? Keeping in mind that level term life insurance is life assurance, it’s necessary to plan carefully. Discussing the subject might not be one of the most pleasant of duties, but especially if you are parents to young children or have dependents, the question of how to take care of a family, should the unthinkable happen, is best answered before crisis hits. In a time of grief, it is difficult to cope, and having all the financial details worked out ahead of time, with the help of level term life assurance, can save everyone from additional stress. Life and health insurance can’t fix everything, but they go a long way toward solving problems for the family members left behind. When considering life and critical illness cover, there are a number of factors that can influence your decision.
- Budget: Even though a life and illness cover only pays off if you die or become critically ill before the term ends, the inexpensive cost makes it a good deal. Some life and critical illness assurance costs only pennies per day, providing peace of mind that if something were to happen, your family would be provided for. Remember, the higher the payout the more expensive the premium.
- Coverage: Is the life assurance providing the options you need to cover your family to your satisfaction? Does it cover the car loan, the mortgage, lost income, or other small loans? It’s up to you to decide what additional options are needed by your family, in order to provide for their unique needs and conditions. You know your family and their needs best, and what they would need to carry on without you financially if it becomes necessary.
- Cost: The earlier you start, the less expensive the premiums are. Age, health, occupation and your status as a smoker all have an impact on the cost of life and health cover. If you’re thinking about fibbing about your status as a smoker, don’t. If your illness is a result of smoking habits, the insurance company may refuse to pay off the claim, citing fraud on the initial application.
Above all, answer all questions on the application form for life and health insurance 100% accurately and honestly. False answers could null and void the contract, and when it comes time to pay off, the insurance company is within their rights to refuse to release life and health cover benefits to your dependants.
What is over 50 life insurance and how does it help you? Is the life insurance you have currently meet your needs? Is life insurance a necessity or a luxury?
These are questions you should discuss with your spouse and family, especially in this day and age when nothing is certain and you want to provide the best for your family. These type of discussions are often not easy, but careful planning now can save a lot of money and heartache in the future. Compare policies and ask yourself, is the life cover offered suitable for the future of your family and its goals? Whether you’re just starting out or well into raising a family, it’s time to consider all your options and decide what life and illness cover will be most beneficial to you.
