The terminology used to describe policies that pay out on the death of the policy’s owner is very wide. Why do we use the terms life assurance, life insurance and life cover almost interchangeably? The names, or rather the definitions of those names, have become blurred as we commonly use several different names to describe the same thing. Life assurance is possibly the most correct term as a definition of an assurance policy is one where we are insuring against a risk that will happen. Death is a certainty, so it will happen. Only the time of that death is an unknown. Whereas an insurance policy is one where we are insuring against a risk that may happen. Hence we talk about insuring ourselves against a critical illness affecting us, or against the risk of our house burning to the ground, or of us having a car crash. Life cover for a name seems to avoid this possible confusion, by side stepping around it and stating simply that the policy is to provide cover. So the policy is a life cover deal between the insurer and the insured, or should that be assurer and assured? The name has been known as life cover for over many generations, as protecting or insuring ones own life and property became more widespread. The origins of life insurance are debated. From Roman times, where club members paid into a fund that was later shared out on the death of its members; to medieval times in England, where commoners placed bets on the likelihood of a certain nobleman dying in battle, the stories are varied and interesting. Today, it is essential within life cover for a connection to exist between the person taking out the policy, and the person on whom the policy is taken. This is known as insurable interest. So a life policy on the Queen of England cannot be taken out by anyone other than herself or her family. A life cover deal taken out by Prince William on the Queen, would satisfy the rules. It has certainly been possible to take out a policy known as life cover for over hundreds of years. Contrast this with critical illness policies, which have existed for only tens of years rather than hundreds.
Life cover deal - Life cover for a - Life cover for over
Life cover for people has a long history, beginning in Roman times when a group of people gathered together and formed “burial clubs” designed to provide support and financial benefits for the burial of the deceased and care of survivors. The practice ended in 450 AD, but was resurrected in 17th century England and forms the basis of life insurance as we know it today.
The basic two types of life insurance protection today are “term” and “permanent”. Term policies are straightforward and simple – insurers are paid a set premium for a set term of time, and in return, should the policy holder die or become ill in the meantime, a set amount of benefit to cover expenses such as a home mortgage, car loan, or other small and large financial burdens are paid. At the end of each term, which averages about five years, the policy is up for renewal where the premiums can be increased unless you opt in for a level term life cover deal.
The benefits to this type of policy are knowing exactly what you’re getting; expense is low because none of the premium is going toward the upkeep and maintenance of an investment account; it’s easy to shop for and compare policies; and you pay for only what you need when you need it.
A permanent life insurance policy is different. While a benefit is paid to the beneficiary upon death of the policy holder, there are more options available to the policy holder while they’re still alive. The policy serves as an investment avenue, earning dividends which then can be applied to reduce premiums or reinvested. This kind of policy is typically more expensive than term insurance because of the investment aspect.
In addition, life cover for a family can include protection of income, a mortgage for a home, a car or student loan, or other types of financial obligations. Another option is life-health assurance, meaning benefits are available in the event of a critical or terminal illness. An unexpected critical illness or death can destroy a family, at a time when stress is at the maximum. The last thing anyone needs to worry about when catastrophe hits is how the bills are going to get paid or if the home is going to be lost, too.
Life cover for people is also available as a joint option, meaning both partners or spouses can be covered by the same policy. In this case, benefits are paid upon the passing of the first partner, whereby the surviving spouse would need to look for another policy. This is especially appropriate in families with small children, although it’s a good option of life cover for seniors that shouldn’t be overlooked.
Life cover for over 50 is available, although the premiums may be a bit more expensive than if you’d gotten the policy at an earlier age. Basic premiums are based on age, gender, smoking status, and length of the term. Additional options such as income protection, critical illness options, mortgage and life health insurance will add to the premium, but this is strictly your choice when deciding on the best life cover deal for your family.
Life cover for seniors is likely to require a higher premium, due to the age factor and risk for illness, but term life assurance is still the least expensive option when planning for the future. Life health insurance is also something to consider for the older consumer, in order to cover burial expenses or health costs and not to burden the surviving family members. Life cover for seniors is a serious consideration for all family members, and should be discussed and decided before an emergency occurs, but life cover for over 50 is available at inexpensive rates.
When applying for a life cover deal, you will be asked some questions. It is imperative that you answer with full disclosure and 100% honesty, otherwise you run the risk of the insurer refusing to pay out full benefits to your beneficiaries due to falsified information. This is regarded as a breach of contract, so it’s important to answer all questions truthfully. Life cover for people has rules, regulations, and conditions so it is in your best interest to read carefully any policy you are considering to make the best decision possible for your family.
When looking for a proper life health assurance for your family, don’t just look at quotes and benefits offered for a life cover from only one agency or broker. There are many companies online that provide free quotes, and by considering a life cover from only one venue is limiting and may cost you money in the long run. You want your life covered by the best and most comprehensive life-health insurance available at the best price, and the optimal way to receive what you need is to compare the many available plans and not limited by the quotes for life cover from only one agency or company. Choose a life-health assurance that fulfils the needs of your family should you not be there someday to take care of them.
When starting a family, life-health assurance is probably not the first thing you consider, but life cover for a new family is very important. No one can predict the future, but the one thing we all have in common is we will all face death one day, and it’s likely that we will all face a critical or terminal illness. At some point you need to think about the best way to keep your life covered so that when the inevitable happens, financial concerns are kept at bay and you leave your children and dependants in the best financial shape you can provide for them.
Although life cover may seem like a luxury, for the price, it is really a necessity if you have dependants or a spouse that will suffer from your loss of income upon your death. Since both partners can be covered on the same policy, you can rest assured that should something happen to either of you, the survivor will have the financial means to provide a home for your children, without the added burden of trying to solve financial woes at the same time while undergoing one of the most devastating losses to a family. It’s really a good idea to sit down and have a discussion regarding both of your wishes, what your plans are for the future, and decide on the best way to have your life covered so that when an emergency occurs, at least that worry is off the table.
In closing, these are the points you should think about:
- Research the different life assurance plans available to you, and compare prices and plans to find the right policy that serves the needs of your family.
- Discuss the options with other family members and get their input. Decide what options are important to you, and which ones do not seem necessary. For instance, if you do not have a mortgage or large outstanding debt, this option may not be necessary.
- Read over and choose your plan carefully. Answer all questions honestly and with full disclosure.
- Keep the premiums paid and up-to-date.
Choosing the right life assurance for you and your family is one of the biggest decisions you will make, and one of the most cost-effective for future protection. With careful research and discussion, you can save your family much heartache in the future by taking action today.
