A Life insurance Policy is an investment that accords financial protection to your loved ones. By insuring your life, you protect the best interests of your dear ones, even after you are gone. That gives you the peace of mind that you fulfilled your moral obligations during your lifetime.
What is Life Insurance?
Life Insurance is a financial arrangement between you, the policy holder and the insurance company, for the benefit of a third person. So, if the policy holder dies during the existence of the policy, the beneficiary is paid a pre-determined lump sum.
In other words, a life insurance policy is an agreement between you and the insurance company. In exchange for monthly premiums, the insurance company agrees to provide a lump-sum benefit, known as a death benefit, to the beneficiary.
Why should I have Life Insurance?
There are many reasons why people must have a Life Insurance, but the most important one is security. As a matter of fact, most people are worried about what their family would go through, if they were no longer there to take care of their needs.
"If I die whilst my children are still young my wife would struggle to pay the bills and feed the children with no income"
"My partner wouldn't be able to continue to pay the mortgage if I weren't around"
"We don't have funds set aside to pay for funerals, if I passed away now I don't know what my family would do"
"I would love my children to have an inheritance without having to worry about inheritance tax"
"If I died now would my children still be able to live the life I want for them and get the education their ambitions desire?"
When is the best time to buy Life Insurance?
The best time to buy a Life Insurance policy is a day before you die. Unfortunately no-one knows when that day is or what’s in store for them. So, the sooner, the better it is to get started.
The cost of a Life Insurance Policy depends upon the risk involved. The younger you are, the less of a risk you are at. Therefore, the premiums are likely to be lower. However, if you have been diagnosed with a medical condition, you may find your premiums slightly higher.
Wouldn’t it be easier to set aside every month for my children?
A lot of people consider this as an option, but what if something were to happen before you’ve saved up enough. With a Life Insurance Policy, you are guaranteed of that. From day one when your Life Insurance Policy is accepted, the benefits begin. So if the policy holder dies months after, or even days after that, still the beneficiary would receive a pre-determined amount.
I’ve heard Life Insurance companies don’t pay out?
Overall, £3.6 billion was paid out in protection claims in 2015, which means that every day, insurers paid out more than £10m – ABI statistics (Association of British Insurers).
Insurers are in business to pay claims, not to decline them. 97.2% of all individual protection claims in 2015 were paid, while just 2.8% were declined. When claims are declined this is usually due to the customer not disclosing important information when taking out the policy, or claiming for a condition that is not covered by the policy – ABI statistics (Association of British Insurers).
But I get Death In Service (DIS) from my work
This is one of the most common phrases that we hear in the insurance industry. However, there is always a possibility that you may switch jobs sometime later. Not all jobs provide a DIS policy, and also there is always the retirement period, when that won’t cover you. That would unfortunately leave you unprotected, vulnerable and exposed to uncertainties. Also, by then you may not qualify for a life insurance policy due to your age and possible medical conditions.
At that time, you may in fact be denied a life insurance policy. So, it’s a good idea to get one when you are young in order to avoid disappointment later.