What is life insurance?
Life insurance was created to provide funds to the family of the deceased insured person for funeral and related purposes and even an amount beyond that, in order to cope with the sudden loss of the income that person provided to their household. Over time, several other aspects were added and many different forms of life insurance were created.
Why do I need life insurance?
Unfortunately at some point we will all move to greener pastures, so to speak, and your remaining loved ones—your children, spouse or other beneficiaries—should not need to pay for your funeral and get into financial troubles after you are gone. Furthermore, additional cover can provide you with funds if you become incapacitated to work and earn money or are diagnosed with a severe illness. Life insurance cover can also provide you with extra funding for your latter days.
What types of life insurance are there?
In the UK there are term assurance policies, which are for a fixed term and your beneficiaries receive a benefit only if you die during the term. These also include mortgage protection life insurances and family income benefits.
There are also permanent policies, better known as “whole of life” assurances, like endowment insurances, where you will at some point receive money even if you do not die. These also include accidental death and limited pay cover.
All of the above can have additional cover for accidents, critical illness, disability, terminal illness and similar circumstances.
The over 50s insurance is a mix of the two, where you have life insurance – as long as you pay your premiums – but you never receive any cash; only your surviving beneficiaries will get a pay out—with, again, possible coverage for illnesses, disabilities and similar.
What is life insurance with critical illness cover?
This insurance pays out if you are diagnosed with one of the listed critical conditions, generally some sort of ailment that has a permanent effect on your life. It usually covers conditions such as Alzheimer’s, dementia, vital organ transplants, heart valve replacements, several disabilities, accidents, permanent loss of sight and so on. It also may include payment if you receive a terminal illness diagnosis, but limitations do apply.
What is over 50s cover?
This covers people who are over 50 years old—even up to 85— so they can get life insurance coverage. Mainly funeral costs are covered, but the offers vary. Until recently it was almost impossible to get life insurance if you were over 50 unless you had a spectacular bill of health. But now all you need to do is make it through the first two years of payments and you get full cover. It is most certainly a product of statistically longer life expectancy in the 21st century.
Do I have to pay for as long as I live?
No, there is a limited-pay version of life insurance, where you pay for a pre-determined amount of time—usually 10 or 20 years—and then the policy pays out when you die or when you reach the age of about 65 (the precise age may vary), whichever comes first.
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