Life Insurance Consumer Test
Summary
There are various sorts of life insurance quotes plan available in the market. Many customers are now experiencing the benefits of cheaper monthly premiums by switching to pension term assurance (PTA) because of the tax benefits available on the cost of this type of policy. It is not, however, suitable for everyone.
It was revealed recently that the cost of life cover has reduced big style in recent years. So what type of insurance plan is most suitable for you?
Term policies are the cheapest and simplest typeof life insurance – you pay a premium regularly each month for an agreed amount of cheap life insurance for an agreed number of years that the policy will be in force for. If you were to pass away whilst the policy was in place, it then pays out a lump sum. If the policy terminates and you are still alive, no money is paid out.
There are several types of term insurance: “level” term is where the payout is a set amount; “decreasing” term, which is often slightly cheaper because the cash to be paid out decreases each year. With most customers this type of insurance policy is taken out to protect a mortgage.
“Increasing” term insurance is an option where the insurance cover rises a bit each year during the course of the term; this can be an excellent way of protecting your familyagainst inflation.
Joint life policies are useful for couples who use both of their salaries to pay the mortgage because a payout is made if either policyholder dies.
Family Income Benefit (FIB) offers the client’s beneficiaries a monthly income from the date of death until the policy ends rather than paying out one lump sum.
The value of cover you need will depend upon your own individual position. Most medium and large sized businesses offer a death in service benefit which can pay out 3 or 4 times to your partner if you were to die whilst still employed. Hence if you are reasonably confident about staying with that employer, you may reach the conclusion that paying for additional life cover with another arrangement was wasteful.
The price of a life insurance policy depends on a few factors, for example, the type of policy, the length of its term, and certain health criteria, and certain health criteria – whether you are over-weight or whether you smoke. Underwriter are also especially clamping down on obesity.
There are serious advantages to moving to pension term insurance. If you already have a term insurance cover which pays out a tax free cash sum, you can reduce the cost of your premiums by shifting to a pension term plan. The reason is because under new pension laws, most policyholders qualify for tax relief on the money they pay for their life insurance plan if they opt for a pension term assurance (PTA) policy. This type of insurance is basically the same as the usual term insurance in so far as it is still protection-only. So it pays out if you die within the insured period but if you survive, the policy has no value.
Not everyone stands to benefit from switching to PTA, however. For instance, if you bought your life cover a long time ago, the larger premiums that you may now have to pay because of your increased agecould well outweigh the benefit of tax relief. Similarly, if you have had a significant illness since you took out your life insurance, you will probably be better off staying with your existing life insurance policy.
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