Life insurance is a long-tail insurance arrangement which pays a lump sum of money to the insured’s beneficiaries after his death. It is a long-term insurance cover where the insured pays premium over a period of time for his dependencies to benefit after his death. The types of UK life cover are term life and permanent life policy. This article provides you with detail on life insurance.
Categories of life insurance products
Term life insurance
Term life insurance policy stipulates the period of insurance cover where the insured’s dependencies enjoy the benefit of the policy if the policy holder dies during this insurance period. The insured pays a flat premium for a specified period of time for his beneficiaries to claim from the policy if he dies during the term of the policy. The policy expires after a specific period of time and the insured can renew for another term period. However, premiums are non-refundable.
Permanent life insurance Permanent life insurance provides cover to the insured’s beneficiaries upon his death and does not have a specified policy period. The duration of premium payment depends on the type of the permanent life product, like the whole life cover where the insured pays premium throughout his life. Permanent life is categorised into whole life, endowment, limited pay, variable life insurance and universal life. Whole life cover This provides cover up until the insured dies, for example, providing life insurance cover for over 50 years and premiums are paid throughout the life of the insured. Universal life and variable policies were developed from the whole life cover. Universal life has a flexible premium payment plan attached to each benefit, while the variable policy shifts the risk of investment to the consumer. Life endowment The policy promises to pay the insured’s beneficiaries if he dies within the term period of the policy or due to life critical illness. The insured can also get a lump sum payment on the endowment maturity date.
Scope of cover
The perils covered by life insurance are natural death and critical illness on some policies. It is important to note that the policy does not pay if the beneficiaries are suspected to have caused the death of the insured or due to suicide. Life assurance quote can be easily obtained online from life insurance companies.
Importance of taking life insurance
Life assurance UK guarantees a constant income to your beneficiaries if you die and it is a form of long-term investment. It is critical insurance which is a source of income for your dependencies.