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Life-Insurance Money Saving Tips, different types of life insurance available and ways you can save money.


 


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Life Insurance –
Money saving Top Tips

by Michael Challiner **

More and more people are buying
life insurance
online and the numbers
seem to be doubling every two years. The reasons are clear.
Prices are lower on the Internet and life insurance
is fundamentally a simple insurance product.

Despite the underlying simplicity of life insurance, most web sites
channel their online clients through a telephone based help
and advice service manned by experienced personnel.
They represent your safety net so if a little
technical knowledge is called for, help is at hand.

But it’s always a good idea to have a few Top Tips in your back
pocket when you’re shopping online for life
insurance. They’ll help you ask the right
questions and find the best policy.

1.   Always have your Life Insurance policy “Written in Trust”.

This means that in the event of a claim, the money goes directly and
immediately to the person(s) you nominate when you first
take the policy out. It also avoids all possibility
of your estate having to pay Inheritance Tax on the
proceeds of your policy and that could represent a
40% tax saving !

All you have to do is tell the online brokerage organising your policy
that you want your policy “Written in Trust” and the
names of the people who the life insurance company
pay in the event of a claim. They will then sort it
all out for you. The extra good news is that this service is
invariably free of charge. So it’s a win win situation and there aren’t
many of those around these days !

2:   In the early years a
Reviewable Life Insurance Policy
will be
cheaper but a Guaranteed Policy will work out a
better buy in the longer term.

With a Guaranteed Policy the insurance company guarantees never
to increase your policy’s premium.

With a Reviewable Policy” you agree that your insurance company
can review the cost of your policy at regular
intervals. But don’t be kidded – in our
experience a “review” is just another word for a price increase. After
all, who’s ever heard of an insurance company passing up a
chance to charge you more! The review intervals are usually between 2 to 5 years but this does vary between insurance companies.
You will find the details of the review intervals on
the documents sent to you before you accept the insurance – these are
called The Key Features Documents.

So, comparing otherwise like for like policies, in the early years the
premiums for a “Reviewable Policy” will undoubtedly be
lower than the premiums for a “Guaranteed Policy”.
Thereafter, the premiums for a Reviewable Policy
increase eventually catching up with and overtaking, the
premium for a “Guaranteed Policy”.

In our experience, you can expect the monthly premiums for a Reviewable
Policy to exceed those of a Guaranteed policy in about 7 to
10 years and then within the following 10 years,
more than double again. If your budget is currently
tight then by all means choose a Reviewable Policy – after
all your salary may increase in coming years and ease the strain.

On the other hand, if the premiums for a Guaranteed Policy are
affordable,
we think they represent your best buy.

A footnote. Many insurance companies have stopped offering “Guaranteed”
rates for standalone critical illness insurance policies.
This because they have experienced much higher claim
rates than they initially expected. However, you may
still find a Guaranteed life insurance policy that
also provides critical illness cover. As we have explained, “Guaranteed”
rates are especially good value and if you can get a quote for
a Guaranteed life policy that includes critical illness cover, you may
have a real bargain.

3.   Thinking about a Joint Life Insurance
Policy
?

A Joint Life Insurance policy is usually written on a first death
basis. This means that the policy will pay out on the death of the first
policyholder, subject to the policy being in force at the time. This leaves the second person uninsured and older. Older people
can struggle to get life insurance at an affordable
premium, so rather than a Joint Policy consider
taking out separate policies now. Overall it will work out
a little dearer – but you get twice the cover and double the peace of
mind.

4.   Taking out a Life Insurance
Policy
? Now would be an ideal time to include Critical Illness cover.

Are you likely to need Critical Illness Insurance in the future? Yes?
Then consider adding it now to the life insurance policy you’re arranging.
Why? There are three reasons.

Firstly, a Life Insurance policy combined with Critical Illness cover
will work out significantly cheaper than buying two
separate policies.

Secondly, as we have already explained in the footnote to Tip 2, you
may be able to buy a combined Life and Critical
Illness policy with a guaranteed premium. That could be a real bargain.
Finally, premiums for critical illness cover increase rapidly as you get
older – so the sooner you take it out, the cheaper it will be.

5.  Don’t confuse Terminal Illness cover with
Critical Illness cover.

There’s world of difference between Terminal Illness and Critical
Illness cover so it’s important to understand the
difference.

Terminal Illness cover pays out the insured lump sum if a Medical
Doctor diagnoses you with an illness from which the
Doctor expects you to die within 12 months. Most
good life policies automatically include Terminal Illness
cover at no extra cost. It’s basically an early, and welcome policy
payout.

A Critical Illness policy pays out the insured lump sum if you are
diagnosed with one of a wide range chronic illness and there is no life
expectancy criteria. Indeed, with many of the insured illnesses you could
expect to survive for many years. For example: certain cancers, heart
disease, stroke, multiple sclerosis, loss of speech, sight or hearing,
onset of Parkinsons or Alzheimers disease, third degree burns etc. Say you
were an engineer aged 40 and you lost your sight. A Critical Illness
policy would pay out immediately and that money could well be vital in
helping you and your family through many difficult financial years ahead.
If you just had Terminal Illness cover there’d be no chance of a payout.

So as you can see, Critical Illness cover is far more comprehensive
than simple Terminal Illness cover and for that reason critical illness
cover always costs you extra.

 

About the Author

Michael Challiner has 15 years experience in financial services
marketing at senior level, the last 5 of which specialised in online
marketing. Prior to that he spent 15 years in advertising with two of the
world’s top advertising agencies, J Walter Thompson and Saatchi &
Saatchi. 

 

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Things providing you with specific advice in relation to your own
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