Life Insurance - The Facts
Life insurance protection may be worth considering if a serious illness or your demise meant that your family would be left in financial hardship. Here are some pointers to consider when thinking about taking out this type of cover.
Serious Illness Protection
Many conditions that proved fatal in the past can be treated more effectively nowadays, however if you develop one, your capacity to earn may be hit hard. Critical illness insurance will pay out if you are afflicted by numerous types of medical conditions. A number of policies will also pay out if you die from other causes also.
Some of the general rules for this type of cover are as follows:
Non-smokers pay less than smokers. The older you get, the more you will pay as a smoker, because you are more likely to have your life shortened by smoking related illnesses during your fifties than, say, in your twenties or thirties.
The older you are when you take out the cover, the more you will pay. Death rates obviously increase the older you get, meaning that insurance premiums will rise accordingly as well.
The longer the period of insurance, the more you will pay. So the trick is not to cover yourself for more than you have to. Take into consideration factors such as the age at which any children that you have will become independent, and when any mortgage that you have is likely to be fully paid off.
Women pay less than men, as women tend to live longer. There is not much that can be done about this, however it is possible to get insured as a couple, whether you are married or not, on a joint life policy, which will prove cheaper than two separate covers. However it is worth noting that this will only be paid out once, on whoever is the first to become seriously ill or die.
Mortgage Protection Cover
It is possible to save money by purchasing life insurance that is geared to a mortgage. This will work with a repayment home loan, where the amount owed drops every year and reaches zero at the end of a set period of time.
Income Protection Cover
This type of policy is often sold along with a mortgage. It will pay out if your earnings are affected due to illness or unemployment. This is a form of payment protection insurance and can add quite a lot to your monthly repayments, which is money that would generally be better off being used to pay off your loan more quickly.
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