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Family Income Insurance vs Traditional Life Insurance

There are many life insurance options available today. Family Income Insurance is insurance, also referred to as Month Insurance that will pay out each month; so will provide an income for the beneficiary. A monthly insurance will be something like a family income benefit policy. This will pay out a regular income to the beneficiaries until the policy expires. This will often be used to provide the same income that the deceased would have been putting in to the family.

Traditional insurance will pay out a lump sum. This lump sum payout is the more popular type of insurance. Traditional insurance is term assurance. This will pay out if the insured dies within the term of the policy and the premiums will be the same for the time the insurance lasts. These are often used to cover an interest-only mortgage so the outstanding balance is paid if the mortgage holder dies. It can also be used to leave a sum of money to family members who can invest it to keep them financially secure.

Cost

The cost of the two types of policies is likely to be quite different. If you want to cover the £100,000 you owe on your mortgage for the 20-year term then you will pay a fixed amount each month and then if you die you will get a payment of £100,000. If you want your family to get a £2,000 sum of money each month and die within the first month of taking out the policy, then they will get £480,000 in all. If you do not die until just before the policy is due to expire then just £2,000 will be able to be claimed. This difference in the amount that is paid out will have an effect on the cost of the insurance. Family income benefit does tend to be the cheaper of the two, for this reason.

Pay Out

With a term insurance policy, you will receive a lump sum payment whenever the life assured dies. This means that whether they die the day the insurance is taken out or the day before the cover is about to expire, the same lump sum will be paid. With the family income benefit it will just pay out the agreed monthly amount for the remaining term of the policy. This means that the term assurance could potentially give better value for money, but only if the insured dies later in to the policy. For the first five years a family income benefit would give the best value for your money, but after five years it would be the term assurance that would give the best value for your money, based on the figures above (a twenty year policy comparing a £100,000 lump sum pay out with £2,000 a month).

Benefits

It is worth considering how the family would cope with each financial option. A lump sum could be great initially, but unless it was wisely invested and only spent slowly then it may not be good. Some people may decide to spend it all very quickly and then would have nothing left. If this is a risk, then a regular income could be a better option. It can very much depend on the individual family.

Other Cover

It is worth considering other insurance cover as well as income when making decisions about insurance. You need to consider whether it is necessary to have a lump sum, perhaps to pay off an outstanding debt, or whether a regular income to cover the cost of bills, would be better. It is also good to think about any other money that may be available and who is earning an income in the household that could contribute as well.

It can be difficult to decide between the different types of insurance, as there are so many to choose from. However, each family is different and their requirements are different and so it is important to consider each choice in light of your own personal circumstances.

Vegetarians May Pay Less for Life Insurance

There is a possibility that if you are a vegetarian you may be able to get a cheaper life insurance policy. There are differences between insurance companies and one even offers a specific policy for vegetarians that give them a lower price. This is because research shows that vegetarians are healthier and tend to live longer.

Lower Cancer Risk

The Vegetarian Society has stated figures that vegetarians can have up to 40% less chance of getting certain cancers than meat eaters. The reason for this could be because they tend to eat more fruit and vegetables that have anti-oxidants that are said to help reduce cancer risk. It may also be due to having a higher fiber diet.

Kidney and Gall Stone Risk Reduced

Kidney and gall stone problems are sometimes thought to be due to dietary problems, although they can run in families as well. A vegetarian diet has been found to reduce the risk.

Lower Blood Pressure

It has been found that vegetarians tend to have a lower blood pressure than meat eaters. High blood pressure can lead to damage to the arteries, which can in some cases lead to scarring that can contribute to the risk of heart attacks. Therefore avoiding high blood pressure can be a big health benefit.

Lower Chance of Diabetes

Diabetes was once associated with eating too much sugar, although research has now shown that a persons fat intake plays a part. Whatever the cause, it has been found that vegetarians tend to have less risk of getting diabetes than meat eaters.

Mad Cow Disease Risk Zero

Cases of the human form of mad cow disease are now extremely rare. However, being vegetarian means there is no risk at all of getting it from food.

How Much Are the Savings?

It is difficult to know whether vegetarians just have a generally healthier lifestyle and this is what reduces their chances of getting these problems or whether it is directly due to eating meat. However, whatever the cause there is evidence that vegetarians live longer lives and tends to remain healthier. This is why one insurance company, AFI, have decided to offer a Vegetarian Term Life policy. This has lower premiums than other policies that they offer. A 45-year-old female non-smoker would pay £10.95 a month for a 15-year term policy paying out a lump sum of £100,000 compared to an average figure of £16.39. This means that they would make a saving of £5.44 compared to the average rate. This can soon add up. It is thought that this is a unique policy at the moment and that no other UK insurers take the type of food that you eat in to consideration when calculating your insurance risk.

It is possible that other life insurance companies in the UK may start to offer similar policies as well. The Animal Friends Insurance Company offers this policy and they are a non-profit company. This means that the rates they offer may not be able to be matched by any other companies.

Conclusion

It may be worth asking your current insurance provider whether they will consider reducing rates for vegetarians. If you are one, you may find that you could see some money shaved off your policy or it may be worth you switching to another company. It will very much depend on the type of cover that you have and how long you have had it for. Many insurers in the Uk only tend to consider smoking as a risk factor on top of age and so may not be interested in lifestyle factors unless you have a very risky job or hobby.

5 Ways to Protect Your Life Insurance From Recession

 

With the recession still biting many people, a lot of us are trying to think of ways to cut back on our spending. This is not easy after so many years of already being as frugal as a person can be. Many are cutting back on things that in the past they considered to be necessary such as life insurance. However, there are ways that you can still get the benefit of life insurance without having to pay out more than you can afford.

Choosing your Work Benefit

It is possible that some companies may offer life insurance as part of their benefit package. It can be worth investigating this, as they may be able to get a better price than you can on your own. This is because they will be insuring a lot of their employees in bulk. Therefore take a look and see whether this could be an option for you and how much it will cost you.

Keep Healthy to Keep the Price Down

There are some things that you can do to keep the price down on your insurance. Smokers pay considerably more for their life insurance because smoking is such a big health risk. Therefore, if you give up this bad habit then you could reduce your insurance a lot. You can also get a cheaper policy by being a healthy weight and not having a dangerous job or risky hobbies. It may be easy for you to make a few lifestyle changes that could make a big difference to your bank balance. Doing some research can save you some money by finding out what influences your policy to see if you can reduce your rates.

Have a Term Insurance Policy not Whole Life

If your life insurance only covers you for a certain term, rather than for your whole life, then it will be a lot cheaper. So if you have full life insurance, then consider changing it to a term policy instead. This means that it will only pay out if you die within a certain time frame rather than paying out simply when you die, whenever that might be. This is a far cheaper way to have insurance and it may be all that is necessary in some cases. Consider what your life insurance is for, perhaps to cover debts or look after loved ones. The debts will be paid off eventually and your dependents should be able to look after themselves financially as well.

Compare Prices Between Companies

It is always worth checking to see whether you can get a better price for insurance elsewhere. You will find that you can use a broker, comparison website or even just ask around for a few quotes. You may find that you come across something cheaper. It depends on a lot of factors, such as how long ago you took out your last insurance policy and whether prices have changed significantly since then.

Change from Joint to Single Cover

It may be that joint cover is more expensive than single cover or possibly vice versa. It is worth taking a look in to this as you may find that you can save some money by changing the way that your cover is set up.

There are therefore quite a few things that are worth investigating to see whether you can reduce the cost of your life insurance. You may not need to stop paying it altogether if you can find a way to reduce the cost of it. By changing provider, changing the type of cover, having a healthier lifestyle, changing from term to full life or looking at your employer’s options, you may find that you can save quite a lot of money.

How to Cut the Cost of Mortgage Life Assurance

Mortgage life assurance is an insurance cover that will pay out any remaining money owed on a mortgage if the owner of the mortgage dies. If you have an endowment mortgage, then this cover is included in the endowment most of the time, but it is worth checking to be sure what is covered. In some cases the mortgage company will insist that insurance is taken out to cover their loan, should you die before it is paid off.

How Costs are Calculated

The main influences of the cost of this assurance can be the size of the mortgage and the term. Therefore, the more money that you borrow and the longer you are borrowing it for, the more expensive it will be. However, they are also insuring the risk that you will die. This means that it will depend on your health, age and lifestyle. It is possible to reduce the cost of the insurance though, in a number of ways.

Reduce the Mortgage Amount

It is worth considering the cost of mortgage life assurance when you are buying a property. The more expensive the mortgage is, the higher the insurance will be. If you will already be struggling to cover the cost of the mortgage repayments, make sure that you will be able to meet the insurance costs as well. It is also worth considering having a higher deposit if you can afford it, as this will make the mortgage amount smaller and thus the insurance cheaper.

Reduce the Term

Consider whether you can set up the mortgage to pay it back over a shorter term. You obviously need to ensure that you will be able to afford to do this, as the repayments will be higher each month. However, the insurance will be lower.

Consider Joint Cover

It is possible that having joint cover will make the insurance cheaper. However, get quotes for single and joint cover and compare them, as it is not cheaper for everyone. It may depend on your ages, health and other factors too.

Give up Smoking

Sometimes risk factors such as health, occupation, smoking and risky hobbies are taken in to consideration when calculating the policy. Therefore consider giving up smoking and risky hobbies, be as healthy as you can and be sure to work a safe job if you want a cheaper premium. Be honest though because if you are not, then you may not get a payout if it is deemed you did not disclose necessary information.

Switch Providers

It is well worth doing a cost comparison to see who has the best value for the money for their policies. It is good to do this when taking out the policy in the first place, but also regularly afterwards. It can be worth switching in order to save money. As age is a factor, you may find that once you have had the mortgage for ten years or more, there will be no benefit to changing policy as you will be seen as a higher risk to new insurers and this will increase your rates. However, checking regularly costs nothing and could save you money.

There are a number of things you can do to reduce your insurance cost. It is possible to get quotes for different circumstances and so you could work out how much you would save if you gave up smoking, for example and then decide whether it is something you should consider. You may also want to consider paying a lump sum of the mortgage or putting own a bigger deposit when you buy the property. Think about your lifestyle as well and whether you can make any changes that will have a significant impact on your insurance cost.

What Adjustments Need to be Made to a Life Insurance Policy after a Divorce

After a divorce, there are so many things to sort out, that life insurance can be something that is forgotten. However, it is important to make sure that it is considered and checked over. There are a number of things that will need to be addressed.

Named Beneficiaries

Couples will often have their life insurance set up so that their spouse will be the beneficiary if they die. The payout may just be added to their estate and then whoever will inherit, as named in the will, gets the money. As long as the will has been changed to no longer name the spouse then this should work out okay.  If the insurance is tied up in a trust then this may need to be altered so that the beneficiary is no longer the spouse.

Amount of Cover

The amount of cover is very important and it may need to be changed after a divorce. You may need to consider what your income is and whether your dependents will need more money now that there is only one breadwinner in the family. It is worth considering the situation and makes changes accordingly. It is worth considering your ex-spouse and what their income is as well as yours if you have children, so you can make sure that they will be well supported financially if you die.

Joint Policies

If you had a joint life insurance policy then you will probably want to make the necessary changes to create separate policies. This may have been on a mortgage, for example, which will need to be sorted out. Whoever takes over the mortgage will need to make sure that they have the required amount of cover so that it is paid off should they die. Joint policies will need to be separated so that both parties have their own cover. It is important to think about how much cover may be necessary and how long to take the policy out for. If you have mortgage life insurance then this is easy, but if you are considering how much may be necessary for your beneficiaries, then this could require some further planning. It can be cheaper to have a term policy, which is wise to have as long as your beneficiaries will need financial support, perhaps until they are old enough to earn their own money.

If You Have no Insurance

If you currently have no life insurance, it may be worth considering obtaining a policy, now that you are divorced. It may be that you or your spouse may need to give up work to look after the children or that because of the divorce a property is sold and there are fewer assets for the children to inherit. Each individual situation is obviously different. You need to consider whether your children will need extra cover considering the change in circumstances. Think about whether employment status has changed for either or both of you and how that might affect the children should one of you die. Also consider your assets and savings and whether these have significantly reduced as a result of the cost of the divorce and whether not having these could increase the need for insurance.

Divorce is an emotional time; it can be costly as well. Thinking about whether you need to pay out more money for life insurance may not be welcomed thoughts. However, it is important to have the peace of mind of knowing that your loved ones are well looked after. Therefore it is worth considering how they might be cared for financially, if you die.

Understanding and Getting Life Insurance if you Have Hepatitis

There are different types of Hepatitis and the type that you have may affect your chances of getting life insurance. Insurance will be harder to find than for people without the disease and it could be more expensive too. Some insurers will not insure someone with or that has had Hepatitis and others are more open-minded.

About Hepatitis

The three main types of hepatitis are A,B and C. They all cause inflammation of the liver. Hepatitis A tends to be caused by ingesting contaminated food or water often in areas of poor sanitation. Hepatitis B is spread through the exchange of blood or body fluids and can be passed from mother to baby. This can be transmitted sexually, from unsterilized needles or contaminated blood. Hepatitis C is spread in the same way but also from blood transfusions before the screening process came in to use. There are also D-G types as well. A & E only cause a short-term infection. However, B & C cause an on-going illness, D is only present if you also have B and there are vaccinations for A & B. Therefore the type of Hepatitis is very important to an insurance company, as a short-term illness is not a concern for insurers but an on-going illness is much more so.

Insurance Checks

A life insurance company will ask you all sorts of health questions and they will want to know how serious the condition is and what treatment is being done and if you have any other illnesses as a result of it. They may also be interested in family history, how you got the disease and other information. If you have or had Hepatitis B or C, insurers will be most concerned about this type, as these can lead to other health problems and may cause death. Therefore some insurers may not offer any cover and others may charge very high rates. The type of insurance and seriousness of the condition will change the premium amount and each individual case will be looked at and assessed.

Reducing Insurance Costs

If you have Hepatitis B or C then you will be more limited in the insurance companies that will be willing to give you cover. You will need to find out who does provide this insurance and then get a quote from each one to see who gives the best value for your money. If you take out a term life insurance then this will be cheaper as this will cover you just for a certain period of time rather than your whole life. A whole life cover will have to pay out eventually, as the holder may die while insured. However, there is a lower risk with a term life insurance policy as it is for a limited period of time. The lower the term, the cheaper the insurance will be. It will also be cheaper if you are in better health and receiving treatment.

If You Already Have Life Insurance

If you already have insurance, then it is best not to change insurer, as this is likely to mean you will end up paying higher premiums. If you are looking for new insurance then it is possible that the costs will be higher or worst case scenario, not be able to find cover at all.

Conclusion

If you have had Hepatitis and are now cured, then you may still be penalized on your insurance. You may also be penalized regardless of which type of Hepatitis you have and what your current health condition is like. Make sure that you look around and research various quotes. It may be a good idea to talk to your potential insurer about the fact that you have recovered from Hepatitis and that you should therefore not be penalized by a high premium. There are some brokers and insurance companies that deal specifically with unusual cases like this and they may be worth contacting for further information.

Do I need Mortgage Payment Protection as well as Mortgage Life Insurance?

Having a mortgage is a big responsibility. This is why many people decide to take out insurance in case they cannot pay. However, there are different types of insurance and it can be confusing as to which to take out.

What is Mortgage Payment Protection?

Mortgage payment protection insurance will pay out if you are unable to cover the cost of the mortgage due to being out of work or unwell. It usually will pay out for up to a year of the policyholder being out of work.

What is Mortgage Life Insurance?

Mortgage life insurance is an insurance that will pay out a lump sum to cover the cost of the mortgage if the mortgage holder dies.

Do I Need Mortgage Payment Protection?

Mortgage payment protection is useful for people who will struggle to make their mortgage payments if they are out of work. This means that it is no use for people who are out of work. It only pays out for a year, so if your company pays sick pay for that period, then you may not need it. However, you will still need to consider what may happen if you are unemployed. You may find that your mortgage company will allow you to have a payment holiday, which would give you time to find a job or recover from your illness. You may also have enough savings to cover the mortgage repayments for a year and therefore have no need to take out the policy.

Many people feel very negative towards payment protection insurance. However, there is not necessarily anything wrong with the insurance itself. The problem comes when it is sold to those who do not need it, such as people out of work or it is added on to a mortgage without the mortgage holder being told. Another instance of misleading selling pratices is when the person is told the insurance is compulsory, when it is not.

The insurance could be useful in some circumstances. It can provide peace of mind for people who feel their job is at risk or they are likely to be unwell and they would not be able to manage their mortgage repayments. It would mean that they would have less chance of losing their home, as their mortgage payments would be taken care of.

Do I Need Mortgage Life Insurance?

It is essential that everyone with a mortgage have mortgage life insurance, the mortgage company will insist. They will want to make sure that if either party named on the mortgage dies the mortgage gets paid off. This will secure their investment.

Having this insurance is not a bad thing and will not be that expensive as long as you are young and healthy. It will mean that you will also have the peace of mind that if you die, your spouse and children will have somewhere to live and not have to worry about paying for a home. If you are on your own it will mean that the house can be sold and value added to your estate for your beneficiaries.

Is it Worth Paying Out for Both?

As you will already have mortgage life insurance, you may wonder whether mortgage payment protection is worth having as well. They both provide cover for different things and so it could be worth having both. It will be up to you to decide whether the payment protection will be of use to you. If you have no savings and an insecure job, then it could be wise to get this cover, especially if you have dependents relying on you having a home for them. It will cost money and it is worth finding out how much you will have to pay out so you can work out whether you can afford to pay that much out each month.

How to make the Best Choice Between Income Protection and Critical Illness Cover

Insurance can be an expensive option for many people. Therefore it may be that they cannot afford to have insurance to cover everything. Therefore choices may have to be made. This could be between things such as income protection and critical illness cover.

What is Income Protection Insurance?

Income protection insurance will pay out if you are unable to work because you are unwell or unfit. This means that if you have an accident or have an illness or disease, then the insurance will pay out until you get back to work or retire. They will tend to pay out a percentage of your income, which is usually over 50% and sometimes up to 90% depending on the insurer.

What is Critical Illness Cover?

Critical illness insurance will pay out if you get a specific illness. The specific policy will determine which illnesses it will pay out for. It would pay out a tax-free lump sum on diagnosis of one of the illnesses that is covered in the policy.

Benefits of Income Protection

Income protection will help you get a decent income if you are not well enough to work. You may have some sick pay entitlement but this may not be equivalent to your full salary and it could get lower, if you are on long-term sick leave. Some companies will only pay out the statutory sick pay amount right from the start, which is likely to be less than your salary. The extra money will mean that you will have the time to make a good recovery before feeling pressure to return to work. You will not have the worry of money while you are unwell either, which could help you to make a better recovery by taking away a lot of the stress.

Benefits of Critical Illness

Critical illness insurance will give you a lump sum of money if you get diagnosed with certain illnesses. This money will allow you to be able to give up work or change your job to one that is healthier for you. If you need time away from work, then it will give you the means to be able to afford it. It may even be enough to pay for a holiday to allow you to get away and recuperate.

Choosing Between the Two

Critical illness cover is usually a lump sum. You can choose how much that lump sum will be and this will affect how much the insurance costs. With income protection you will get a percentage of your current income and so you have no influence over how much that will be. The lump sum could pay off a mortgage or other debts or could be invested to provide an income. The monthly payments will not change and will usually only be enough to cover monthly expenses.

Critical illness cover will just pay out once. However, income protection will continue to pay out until you retire or get better, which means it could pay out for a very long time. Both types of insurance can be expensive although by changing the term or the conditions it pays out under, this will lower the cost.

If you have a big debt that you would like to pay off if you become unwell then critical illness is the one to go for. However, if you are concerned about a lack of income if you get ill then income protection would be more useful to you. It will depend on your personal circumstances, what risk you feel you have of getting certain diseases and if the insurance covers them as well as what other sick pay benefits you have.

Life Insurance Options when you have HIV

HIV is a disease that has seen the number of cases increase year on year since it was first discovered. It is an autoimmune disease where the body becomes unable to protect itself from infection and will eventually lead to death. There are roughly 0.15% of people in the UK who have HIV.

Getting Life Insurance is Easier

In the past getting life insurance if you had been diagnosed with HIV was virtually impossible. However, many people with HIV do have families that they would like to make sure are well looked after financially when they die. Since medical care has improved and there are drugs that can prolong the life of someone with HIV, getting insurance may not be so difficult. It has taken insurance companies a long time to get the confidence to allow people with HIV to take out insurance. However, there are now some policies available. The policies may have restrictions with regards to how long you have had HIV, what stage it is at and what treatment you are having. It can still be a very long and difficult process and there are still some companies that refuse to insure someone with HIV under any circumstances. For those companies that will grant insurance, there are several options.

Life Insurance

Life insurance will pay out if you die within a certain term and if you survive, no money is paid out. It is always the case that the shorter the term the cheaper the insurance and this would very much be the case with someone with HIV. As those with HIV will tend to die younger than people without the disease, the younger they are when the policy ends, the cheaper it will be. The amount of time they have had the disease will also be an important factor in the decision as to whether the insurance is given and how much it will cost.

Life Assurance

A life assurance policy will pay out on death and is a lifelong policy (although this type of policy may be able to be cashed in early). It is much less likely that someone with HIV would be able to get this type of insurance due to the price tends to be extremely high. If they wanted something to pay out on death, it could be wiser to put some money away each month in an investment, which can be cashed in when they die.

Accident Policy

There are some insurance companies that will cover a person with HIV in the event they have an accident. This type of policy can be purchased regardless of health but will only pay out if you die from an accident not related to your health condition. The benefits of this type of policy are that it is inexpensive and very easy to understand however, is not viewed as much value because of the policy limits. Accidental insurance is unlikely to be of very much use and provide very little peace of mind, although it may be the only sort of insurance available.

Already Insured

It is important to know that if you already hold an insurance policy before you are diagnosed then you do not need to inform the insurer and even if you do, they are not permitted to change the policy at all or the premiums being paid. If the policyholder dies due to an HIV or AIDS related illness it would still pay out unless there was something in the terms to say otherwise. This means that if someone is diagnosed with HIV and has insurance, they should think very hard before cashing it in or stopping payments it as it could be very difficult for them to find something else and they would almost certainly have to pay a larger premium.

Today there is more life insurance option available for people with HIV. It can still be very expensive though and certain types will be more expensive than others. Doing some research will help in finding the best cover at the best price.

Choosing the Best Financial Cover; Life Insurance vs Life Assurance

There are many people that do not have a great understanding of life insurance. It can seem like a rather dull subject and perhaps something that is not relevant to them. However, it is important to have an understanding about life insurance so that you can make an informed decision as to whether you think that you and other members of your family need it. Most people know that life insurance will pay out when you die. However, it is important to understand about the two main types of insurance and when you may decide to use them.

Life Insurance

Life insurance will cover you for a specific time period that you determine. This means that it might be used to cover the amount outstanding on your mortgage until the amount owed is paid off. It might be used to provide a pay out if you die until your children are at the age they will be earning money themselves, so you may take it out until they are 18. At the end of the term of the insurance, you will get nothing back if you survive. If you die, your beneficiaries will get the agreed pay out amount.

Life Assurance

Life assurance is quite a different thing. It still has a life insurance element where a lump sum will be paid out of you die. However, the big difference is that it has an investment element and so although if you die early on, you will get an agreed lump sum, once the policy has gained value, you will get more than this. If you outlive the policy you will get value of the investment, usually annual bonuses and a terminal bonus as well. It is even possible to cash in a life assurance policy if it has earned some value although many people choose to sell them to an investment broker in order to make more money.

Which to Choose?

If you are considering life insurance and wondering which to choose, then it is first worth considering what the purpose of the insurance is. If you want to make sure that there is definitely some money when you die then life assurance would be the right thing to go for. However, if you only want the cover to last until your dependents can support themselves or loans are paid off, then a life insurance policy would do the trick. However, if you had life assurance, you could cash it in when you no longer need it and you may get some money back.

Like with all investments, there is no guarantee that there will be any money to pay out to the beneficiary. Investments are risky and with the stock market not performing that well, many investments that depend on it, such as life assurance are not paying out so well. There have even been restrictions on being able to cash in some policies because they are not doing very well. But all investments should be long term and the longer you keep the money invested, the more chance you will do well from it.

Cost

The cost is a big factor to consider though. Life insurance is a lot cheaper than life assurance. This means that you may only be able to afford life insurance unless you have some spare money that you are willing to invest. You may also find that there are better places to invest than a life assurance policy and so it is worth giving it some very careful thought. You may therefore find that the life insurance is enough to cover your needs and will give you the peace of mind that you desire.