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What is life insurance?

What is life insurance?

What is life insurance?

What is life insurance?

Life Assurance companies issue life insurance policies. All these policies pay out either a lump sum or a series of payments if you die during the time period covered by the policy. These payments are normally paid without tax being deducted and for most people they are tax-free.

The money you receive from a Life Insurance policy can be used for anything you want but most frequently, people have Life Insurance in order to:

Provide a lump sum to pay off an outstanding mortgage if the policyholder

were to die. This type of policy is generally known as Mortgage Protection Insurance.

Provide money to pay off other debts if the policyholder were to die. The type of insurance used here, would be Term Insurance. Unless there is a specific requirement to be insured such as the repayment of a short term loan, life insurance is rarely taken out for less than 5 years. 15 to 25 years is more usual.

Provide a lump sum nest egg for anyone the policyholder specifies (normally dependents – most frequently the wife and/or children). This is again Term Insurance.

Provide an income, as opposed to a lump sum, for your dependents. This type of policy is known as Family Income Insurance. With this type of policy the income is only payable for the remaining period of the policy’s term.

Most people pay monthly premiums although, if you prefer, premiums can be paid annually in advance. These payments continue for the term of the policy. The premiums for Life Insurance vary according to how long you want the policy to be in force and your personal circumstances – such as your age and medical history.

Life Insurance can be combined with other forms of insurance, such as Critical Illness (also known as Serious Illness Insurance). This provides the policyholder with a lump sum in the event of them being diagnosed with a serious illness. Critical Illness policies can be taken out separately from Life Insurance and usually, but not always, it works out cheaper to combine both forms of insurance into one policy.

The Life Insurance industry is also highly competitive and companies are constantly jostling for new business. Consequently, we are constantly updating our data banks in order to get the most competitive quote for you.

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