Life Assurance

What is Life Assurance?

The insurance industry is full of jargon, so the following are some commonly used terms to describe the types of Life cover that are available as Life assurance or Life insurance products.

Whilst the Financial Services Authority (FSA) distinguish the various Life assurance products available as Life insurance or Pure Protection policies the definitions used here are as those determined by the CII (Chartered Insurance Institute).

Generally Life assurance is a way of mitigating or reducing the financial effects of a terminal life event relating to your, your partner’s or family’s life. 

Death is a terminal life event covered by Life Assurance policies such as term assurance, whole of life assurance or endowment assurance.

An adverse life event covered by Health Insurance is typically accident and sickness, critical illness or terminal illness.

Depending on the type of life assurance policy taken out by you or on your behalf, a payment will be made either as a lump sum or regular payments to the beneficiaries of the policy in the event of a claim being made on your death.

What are the types of Life Assurance?

The following are the main types of life assurance currently available:-

·        Term Assurance pays out a lump sum to your beneficiaries on your death within the stated term of the policy and a Family Income Policy pays out a regular income to your beneficiaries on your death within the stated term of the policy.

·        Whole of Life Assurance pays out a lump sum to your beneficiaries on your death, whenever death occurs.

·        Endowment Assurance pays out a lump sum to the assured on a specified maturity date or to your beneficiaries on your death, if death occurs sooner.

Why should I take out Life Assurance?

There are a number of factors about an individual’s personal circumstances that will determine which of the types of life assurance that may be applicable are based on their suitability and affordability.

For instance, if you are single and have no dependants then life cover may not be suitable for your needs. However life assurance is about providing financial protection for your dependants, and there will be many circumstances where some form of life assurance should be considered.

How should I take out Life Assurance?

The first and most important step after you have decided you may have a need for life assurance cover is to have a discussion with us to provide you with independent financial advice.

Once we have agreed what the most suitable type of life cover is for your particular circumstances we make an application on your behalf to take out a protection policy based on how much you can afford and the amount of cover required, for a length of time to match your needs.

How do I pay for Life Assurance?

Once the amount of benefit you require has been determined your monthly payment or lump sum premium for protection under the policy or cover will be offered to you by the insurer’s underwriter after they have reviewed a completed personal questionnaire relating to your occupation and lifestyle including in some cases a medical report.

The premiums may be guaranteed where the monthly payment and benefit is level, i.e. it does not change for the term of the policy, or may be reviewable every one, three, five or ten years depending on the insurance provider i.e. the insurance company underwriting the policy.

Want to know more?

Talk to one of our qualified financial advisers on 01553 777600 or e-mail us at enquiries@ringassociates.co.uk

Also you may want to read the articles by accessing Directgov at the following website http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/Insurance/index.htm?cids=Google_PPC&cre=Money

and the Financial Service Authority (FSA) consumer guide available on their website at http://www.moneymadeclear.fsa.gov.uk/print.aspx?Page=/products/insurance/types/income/life_insurance