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Life Assurance
Life Assurance at Competitive Prices.
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Assurance Policies.
Life Assurance is a hybrid mix of
investment and insurance. A Life Assurance policy pays out a sum equal
to the higher of either a guaranteed minimum underwritten by the
policy's insurance provisions or its investment valuation. The value of
the investment element is then a reliant on the Insurance Company’s
investment performance and length of time you have been paying the
premiums.
Each year the insurance company adds an annual bonus to the guaranteed
value of your life assurance policy and there is normally an extra
“terminal bonus” at the end. Therefore, as the years go by your life
assurance policy increases in value as the investment bonuses
accumulate. The value of these bonuses are then determined by the
insurance company’s investment performance. Once investment value has
been assigned to the policy, you can cash it in with the insurance
company. However, most people get a far better price for their life
assurance policy by selling it to a specialist investment broker rather
than cashing it in with the insurance company.
If you were to die during a Life Assurance policy’s term, the policy
pays out the higher of either the guaranteed minimum sum or the
accumulated value of the annual investment bonuses. However, if you are
still living when the policy terminates, you usually get a bigger
payout. This is because with most insurance companies, an additional
terminal bonus is awarded.
There is a also a specialised form of life assurance called "Whole of
Life". These policies remain in force for as long as you live and as
such, have no preset term.
There is also a practical difference for the internet user. Whereas you
can buy life insurance online, the Financial Services Authority view
life assurance as fundamentally an investment product. As such they
believe it is best suited to being sold by a Financial Adviser with
advice based on the Advisors full understanding of your personal
details. Therefore, you will be unable to buy life assurance online.
However, you can use the internet to find a suitable financial adviser
with whom you can meet and discuss your requirements.
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The most common form of life assurance is
Term Assurance. This is a life insurance policy which
covers the life of a person in monetary terms in return fir
a payment, usually monthly, and known as a premium. Term
Assurance is the cheapest and simplest form of life cover,
providing life assurance for a fixed term only.
The sum assured is payable only if the
life assured dies within that term. There is no investment
value to the policy at any time.
In the case of Level Term Assurance the
sum assured does not change during the term of the policy.
Policies are generally used to repay a loan on the death of
the borrower (the life assured). Level Term Assurance is
most suitable when the loan has a fixed capital value that
remains unchanged throughout its term.
Decreasing Term Assurance indicated that
the sum assured decreases over the term of the policy. This
commonly used to protect a capital & interest repayment
mortgage, where the outstanding balance reduces during the
life of the borrowing.
Policies can cover a single life or be on
a joint life basis. |
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