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insurance: Life Critical Illness Cover

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Life Critical Illness Cover

If you are the only source of income in your family you should buy life insurance. This will ensure that your dependants are taken care of financially when you die. The insurance will provide either a lump sum payment or a monthly income. The type of life insurance will depend on many factors which require careful research before you decide on a particular life insurance policy.

Whole of Life Policy:

This policy will pay out whenever death occurs. A Whole of Life Policy is more expensive than a fixed term policy although you can get a cheaper non profits Whole of Life Policy which does provide sufficient cover in most cases. A Whole of Life Policy will also give tax concessions but if this is not a consideration then opt for a Fixed Term Policy.

Fixed Term Policy:

A Fixed Term policy is the simplest and cheapest life coverage, but provides minimum protection. You can decide the length of the term and if you die before maturity the insurance company will pay your dependants but if you survive beyond the maturity date the insurance company will not pay out. Read More Below

Company Maximum Age Maximum Cover Number of Conditions Covered Child Cover
LV= 64 £3,000,000.00 51 Yes
Legal & General 64 £3,000,000.00 41 Yes
Nationwide 67 £3,000,000.00 41 Yes
HSBC 59 £1,000,000.00 17 No
Sainsburys 63 Unlimited 41 Yes

A Convertible Policy:

Allows you to switch to a Whole of Life Policy or another type of life insurance.

Decreasing Policy:

The Decreasing Policy reduces the amount of cover gradually over the whole insurance term. These policies are a good choice if you have to pay debts or loans which also reduce over time. The premiums of a Decreasing Policy are cheaper than other policies.

Level Insurance Policy:

A Level Policy pays the same amount of money to your dependant whenever you die during the term of the policy. The payout is always a lump sum. A Level Policy is a good choice if you want to provide your dependant with an amount of money to invest after you die or you want to provide cover for an interest only mortgage.

Average Cost:

The cost of life insurance depends on the contract term, payout amount, age, gender, medical condition and type of employment. Premiums for females are almost 30% cheaper than for males. Those who are sick, old and smokers will pay more.The average annual premiums for 10 years and 25 year terms are given below:

10 Years Contract:

25 Years Contract:

Male over 50, non smoker, £30 Male over 40, non smoker,  £13
Male over 50, smoker, £69 Male over 40, smoker, £25
Female over 50, non smoker, £24 Male over 40, non smoker, £10
Female over 50, smoker, £54 Male over 40, smoker, £20

For more information about life insurance, search the internet. There are several websites where you can compare insurance cover and premiums for the various types of life insurance.

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