Level Term life assurance is a fairly simple to understand product offered by life assurance companies.
You select what level of cover you wish to have and the term that you want. The premium that you pay will remain the same throughout the policy term as will the level of cover.
The policy can be 'single', ie just covering one life. If the policy covers two lives, eg a husband and wife, the policy can be written on a 'joint' or 'dual' basis.
For example, if you have a policy that covers two people for €200k, you can choose to cover these lives 'jointly', (200k gets paid out in the event of the death of one of the two people) or on a 'dual' basis (200k gets paid out on the first death, and a further 200k gets paid out on the second death also). Clearly choosing a Dual basis will be more expensive as the life company is at risk for €400k in total.
Critical illness can also be added to these contracts but i will deal with this and other add on options in future posts.
Level term policies can be used as security against a mortgage but can also be an effective stand alone policy.
In the event of the death of a breadwinner in a household its likly that any mortgage would be cleared as you would already have life assurance, but a mortgage is only one thing that you need to cover. It is always advisable to have a strong life policy seperate from your mortgage cover as you may need to replace their income for a number of years, if there are children in the household it is advisable to at least have enough cover to replace the lost income until the children would be able to be independant from the family home.
The actual calculation on how much cover you should have can be taken care of by your financial advisor.
Self employed term assurance is a product almost identicle to what is listed above but it is only available to self employed individuals, usually at the time of arranging their personal pensions. They can only be written on a single life basis and cannot be assigned as security against a mortage but the big benefit is that you can get tax relief on your premiums.
As with any life assurance policy, the premium you pay will be determined by what level of risk you pose to the life assurance company, age, smoker status, weight, family medical history are just a few areas that Underwriters are concerned about when they look at your application form.
If you have a chequered medical past it does not mean that the company will reject your application neccessarily, they may accept you on cover but on 'special rates'. This means that you will pay a higher premium then you would if you were a normal or average risk for your age.
While it might appear to be a smart move to be economical with the truth on your application, (make yourself a couple of stone lighter, not tell the truch about your alcahol consumption etc) to ensure a more afforable premium, BEWARE, this can be considered 'non disclosure' and could result in difficulties when it comes to claiming on the policy.
FS
No comments:
Post a Comment