Turning 30 is usually a time in our lives when we begin to think about the future.
What will our loved ones do when we are gone? How will they continue to pay the bills and live happy lives?
These questions are usually what triggers those over the age of thirty to begin looking into different life insurance options to help protect their families.
But what options are available? Generally, an applicant who is a non-smoker, and in good general health can secure a life insurance policy for less than you may think.
Thinking about the price of life insurance can be overwhelming, especially when insurance has historically been an expensive benefit. The good news is that the cost of life insurance has been steadily declining over the past 10 years and purchasing a comprehensive policy to ensure your family will be taken care of is easy to fit into every type of budget. Today, the minimum monthly premium for life insurance can be as low as £5 for a policy that has coverage between £5,000 and £10,000.
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There are a number of different life insurance policies available that range in both price and benefits. Policies also carry a range of different “terms” or the length of time in which the policy will cover the holder and beneficiaries; some policies only last a few months while others will cover the policyholder for their entire life.
One of these long-term policies is known as Whole of Life and will cover the holder in full force from when they purchase the policy until they pass away, as long as premiums are up to date.
In order to purchase and keep life insurance coverage, the policyholder will need to make monthly premium payments. The cost of these payments is calculated using a number of different factors – some of the factors that determine your premium include the type of policy you have, how much coverage you require, the length of your coverage term, and your health and lifestyle.
A policy holder’s health and lifestyle choices play heavily into the cost of their premiums. For example, if you are a smoker, it is possible to pay premiums that are double what someone who does not smoke would pay.
The reason for the premiums for “unhealthy” individuals being higher is that these policyholders pose a bigger risk to the insurance company. Someone who has a pre-existing condition or is a smoker is much more likely to need to make a claim that someone who is generally in good health.
Insurance companies need to compensate themselves for this risk, and in order to do so, they generally raise the premium payment amount for individuals who are considered unhealthy or a higher risk to them.
When you apply for life insurance, you are entering into a legal contract with the insurance company. The proposal form that an applicant completes is considered his or her “offer” to the insurance company in order to receive coverage.
When the insurance company comes back with what it is willing to offer and the premium payment being proposed, this is considered the “counteroffer.” When both parties accept this counteroffer, the contract becomes bound upon the applicant making his or her first payment.
This is where the importance of disclosure comes in – the insurance company will make its decision to cover the applicant and determine the premium payment based on the applicant’s answers to the disclosure questions.
Disclosure is simply a fancy word for health and lifestyle questions. When answering these questions, it is vitally important to be accurate and honest with your answers. By law, the contract between the applicant and the insurance company can only be binding if both parties have access to the material facts and that these material facts must be true.
Should you be untruthful in your disclosure of withholding information, it is possible to make the contract between you and the insurance company null and void.
For example, should you not tell the insurance agent that you are a smoker and you are, and you subsequently pass away as a result of that behaviour, the insurance company will have no obligation to pay out the policy’s benefits to your beneficiaries. This means that they will not receive the funds they need to pay bills when you pass away.
Choosing the right insurance policy is a very personal decision. A lot of what will make a policy the best choice is based on a number of different factors such as what coverage you require and how much you can afford to pay for monthly premiums.
There are a number of tools available to help make this decision, including the comparison services that are offered by Insurance Hero. This will help you to compare different plans and ultimately decide which one is best for you and for your family.