They say there are two things you can be certain of in life – death and taxes. While you can’t prevent either, you can pay your taxes and you can look after things so that you can take care of yourself as best as possible. What happens if you’re struck down with a very bad illness? What happens to those who are dependent on the income you bring in? Making sure that all your dependants are well-looked after financially is very important and it’s something that we all need to consider at some stage. Obviously nothing can make the heartache any easier when a family member or loved one passes away, but having adequate life assurance makes things practical.
The money that an insurance company pays to your beneficiary is called life assurance. It’s usually paid to your spouse when you die. In return for your premium payments, the company will pay out what’s called the “sum assured”. When you die, a sum of money is paid out to compensate the family for their loss of regular income. This also helps with any outstanding loans and also to provide for your children (if you have any). Life assurance is not compulsory by law, but it can be necessary. This applies when you’re taking out a mortgage – some financial lenders will require that you have some sort of life cover.
Term assurance and whole of lie assurance are the two main forms of life assurance available today in the market.
Term Assurance
The cheapest and easiest form of assurance is term assurance. With this form, you pay premiums for a set period of time – 20 years for instance. During this period, if the person who’s insured dies, then their beneficiaries will receive a sum of money from the company. When the term is finished however, the cover ceases to exist. So it’s vital to make sure that you take out more cover as if something were to happen to you after the policy is finished, then you wouldn’t be covered.
Whole Life Assurance
On the other side of the coin is Whole Life Assurance. This is a more expensive form of assurance because you are paying premiums for your whole life and not just for a set period of time. Obviously with this form of assurance, you’ll be covered until the day you pass away.
The amount of premiums paid by people can differ when it comes to life assurance. Each case is looked at on an individual basis. You will be asked a series of important questions when you start to apply for life assurance. You may be asked to get a medical report from your GP and in addition to this, you may also have to go for an independent medical examination.
When taking out life assurance, you must realise that you are under an obligation legally to disclose every single relevant detail of your health. What will happen if the insurance company finds out about details that you did not bring to the table, is that they can cancel your policy at any time. This is something that you don’t want to happen, so remember to include all health details that could be important.
As when making any major or important purchases, ensure you shop around for your life assurance cover in order to get the right level of benefits at the right price. Don’t just apply for the first policy that catches your eye – make sure you do your research first.
Carlo Cretaro is a freelance blogger and social media consultant for a range of Irish and UK businesses including Orca Financial.
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