Entries in category Life Insurance

Payday Loan- How it works?

Payday loans are the latest craze among people who are in need of immediate cash but cannot avail traditional loans because of bad credit history. The payday loans are short term and high interest loans. In case of payday loans the borrower generally requires only small amount of money and for a short period of time or to be more precise till their next paycheck. The loan amount varies from &100 to $1000 and sometime it may be extended to $1500. The rate of interest on such loans is very high and ranges from 10% to 30%. This is because these loans are given for a short period of time and the risk involved in giving such loans are very high. Higher the risk, higher is the rate of interest.

Now you must be thinking how the payday loan works? Well! When a person applies for payday loan he writes a personal check which is payable to the lender and is of the amount which the borrower wants to borrow. They must also add the fees amount to the check given. If they do not add the fees to the check, the lender gives the borrower the same amount minus the fees. The borrower holds the check for the time the loan is due and is usually till the borrower gets his next paycheck. The whole process can also be done electronically, that is the borrowed amount is transferred to the account electronically and also the same withdrawn when the loan due date gets over. The fees charged on the loan are percentage of the loan taken or is a particular fees per $50 or $100 borrowed. So, a new fee is charged every time the same loan gets extended or is rolled over.

It is federal government law that the lender must tell the borrower the exact cost of taking the loan. They must provide the borrower the charges for finance and the annual percentage rate generally known as APR and that too in writing before he signs the loan. The APR is dependent on many things like the amount of money borrowed, the interest rate on the borrowed money, the time for which the loan is taken and the last but not the least the cost of credit that you are being charged. All these factors should also be considered while selecting lender for your payday loan.

Whole of Life Insurance Guarantees

Whole of Life Insurance Guaranteed is a life insurance plan that covers an individual for all life and is not fixed for a time period. Thus, in this type of policy the dependents or the beneficiary of the claim receives a lump sum amount whenever the insured dies provided all the premiums have been paid on time. The whole life insurance allows you to pay your inheritance tax, everyday living expenses or any educational expenses of your children even after you are dead, so this in a way gives you peace of mind through its life-long coverage.

The advantages of having whole life insurance coverage include:

  • A guaranteed payment of a lump sum amount when the insured dies
  • Most of the companies strive to give you affordable premium and that too with many flexible ways to pay them.
  • The company gives you the liberty to choose the coverage amount within the limits of the policy.
  • There is a facility of choosing an option to increase the yearly premium by certain percentage, most commonly 5% so that your policy is protected against the adverse effects of inflation. This option should be chosen at the time you take the plan.
  • Most of the whole life insurance plans do not have cash-in value but you may get some cash in value in you pay the entire premium amount at one go. However, this cash in value will always be less than the premium that you pay.

The amount for which you should take the cover depends on many factors like:

  • How many dependents you may need to support in case you die at any point of time
  • If you have any mortgage or after death there will be any inheritance tax that will be required to pay.

Any resident of UK who is who is aged between 16 to 89 years can apply for whole life insurance coverage. As per the law a U.K resident is the one who permanently resides in UK and Northern Ireland and excludes Channel Islands and Isle of Man. The insured can put their policy under trust and can name anyone to be the beneficiary after his death. In UK under the new tax rule, it can also save the beneficiary from paying any inheritance tax. Whole life insurance definitely gives a peace of mind in case you have dependents.

 

What is Life Insurance?

Life Insurance as the name suggests is the policy which insures the person’s life and provides financial protection to their family in case the insured dies. The beneficiary named in the policy is provided a lump sum of money and hence is safeguarded by the financial loss caused by the death of the insured. Thus it is important to know the right kind of insurance policy that will give financial stability to your family if they ever need it and it will also give you a peace of mind. There are various types of life insurance policies in the market and it is very important to pick the one which suits your requirement and budget.

There are various factors which need to be kept in mind before purchasing life insurance coverage. The first and foremost thing that should be kept in mind is your current financial condition and the kind of standard of living you would like to give to your family or the dependents. It is advised to keep a check and to revise your life insurance coverage every year or in case of major events in life like marriage, having children, divorce or when you buy a house or start a business.

When taking up a life insurance coverage the insured need to take a call on the time period for which he/she wants the coverage and the amount that need to be paid.

These are some important factors which will come to picture in case of certain events like when you are into some dangerous sports like:

  • Diving
  • Parachuting,
  • Aviation,
  • Mountaineering and
  • Motorsports to name a few

Into occupations which involve high risks like:

  • Oil & gas industry
  • Working at heights
  • Pilots,
  • Army men,
  • Fishermen etc.

When you have a medical history like:

  • Diabetes,
  • Cancer,
  • Family history,
  • Bowel conditions,
  • Weight
  • Mental disability, depression, anxiety or stress
  • Smoking,
  • Male homosexuality etc. to name a few.

To get appropriate advice on the type of life insurance, the term and the amount, you may need the help of Life search Advisors. They will give you the best advice and the life insurance policy that will suit your actual circumstance. Sometimes the employers take life insurance policies in the name of employees and is called dead peasant insurance and an employee comes to know about it only if the employer willingly discloses it.

Term Life Insurance

Term life insurance insures a person for a limited period of time and at a fixed payment or premium. In this case if the policy expires after a period of time, it is the policy owner’s decision to continue with it or not. This is in contrast to the life term insurance in which the policy owner is insured till he reached 100 years of age or dies. In case of term life insurance the benefits of the policy is fixed and is paid to the beneficiary only in case the insured dies within the specific time period mentioned in the policy. The policy will not provide any benefit or returns other than that mentioned or agreed upon in the policy and is in contrast to the permanent life insurance policies in which savings is also one of the components to allow the insured wealth accumulation.

One of the questions that might pop up is why one would like to have term insurance in place of permanent life insurance. However, there are several benefits of taking up term life insurance which include:

  • The low premium amount which need to be paid and hence becomes much less expensive
  • A person may look for a policy which would expire around his retirement age so that by this time he would have saved sufficient amount of money to pay for its expenses and also the financial needs of his dependents.

The minimum term for this type life insurance is one year and the benefit after death is paid only when the insured is dead within that one year period. The benefits of the insurance will not be paid if the insured die even one day after the term expires. The premium for such type of term insurance is dependent on the probability of the insured dying within one year time.

Another type of term insurance is level term insurance in which the premium which need to be paid is same for the entire term which most commonly is 10, 15, 20 and 30 years. Most of the term life insurance policies have the facility of switching it to Universal life policy or Whole life policy. However, the same mortality tables are used to calculate the cost of the insurance and it is a known fact that premium for term insurance is less than the permanent insurance. The death benefit from these insurance policies is tax free.

Mortgage Life Insurance

Mortgage life insurance is taken to safeguard the mortgage that you have bought even after your death so that your family continues to enjoy living in the home you bought. This is because the sum of money left to pay the mortgage loan is paid off by the mortgage insurance company. Mortgage life insurance is of two types; Mortgage level term assurance and Mortgage decreasing term assurance. In mortgage level term assurance the premium and the coverage amount that is chosen while taking the policy will remain the same and will change only when you alter the policy. In this the company pays out cash sum if the insured dies during the term. Mortgage decreasing term assurance is a policy in which the amount covered in the policy decreases as the mortgage amount decreases. The cover amount equivalent to the remaining mortgage is paid to the beneficiary by the company.

Well! You must be wondering as to why it is referred to as life term assurance and not insurance. Assurance is something which is sure to happen and insurance means there is risk of it being happening. Many of them do call it insurance as well as there is no guarantee that the insured will die within the term period. For mortgage life insurance the non-smokers are bound to pay much less when compared to smokers. The reason is obvious; smokers are more likely to die within the term than the non-smokers. The mortgage term insurance is available at a premium as low as GBP6 and the final premium amount will depend on the policy that you take, term of the insurance and the coverage amount.

When taking up a mortgage life insurance one should know certain things like, this policy is not an investment or saving and you will not get any cash value until unless a valid claim is made for the same. The insured would like that the term and the cover of the policy match the mortgage for which you have taken the insurance. Before taking up any policy one should read the document and the terms and conditions carefully. Check for a policy that allows you to add critical illness coverage and maximum number of these diseases. Mortgage life insurance is of great importance as it protects your house from being taken away from your family in case of your untimely death. It is said that “Better safe than sorry”.

 

 

Life Insurance Policies

There are various types of insurances to protect our goods, house, car and other valuables. Life is also precious and need to be protected for income so that our loved ones and the dependents can be provided in case of illness, sickness and even death. There are various types of life insurance policies available in the market like:

  • Whole life insurance
  • Endowment insurance
  • Term Insurance
  • Joint Insurance and
  • Payout Options

These various types of life insurances are available from different providers like insurance companies, banks, insurance brokers, internet providers, building societies and also large supermarkets and each has differing terms and conditions for the coverage they provide. The type of life insurance taken up by a person or the one that suits you the best depends solely on their needs and circumstances.

Once you have bought an insurance policy it should be regularly reviewed to check that it still gives all the benefits agreed and reflects your financial and personal conditions. Take for example if you have insured for your mortgage payment as well in your policy and have already made all the payments for the sum then your dependent won’t be requiring this money to pay off the debt in case of your death. If you have been made redundant you may ask the insurer to decrease the sum assured and thus reduce the cost of the policy especially when you looking for a new employment.

The term insurance is the most basic type of life insurance policy and it pays a lump sum amount if one dies within the term period. It is of two type’s level term insurance policy and decreasing term life insurance policy. In level term case the amount assured remains same throughout if the insured dies within the specified term whereas in case of decreasing life term policy the amount of money paid decreases with the term. In whole life insurance policy the sum assured is paid whenever the insured dies and are more expensive than the term policies. One of the policies is Family Income Benefit Policy and is a decreasing term policy in which the beneficiary is paid a regular income rather than lump sum amount and it is paid till the time your policy gets over in the insured dies within the term period. It is always considered beneficial to have a life insurance policy which suits your need the best.

Life Insurance Costs

Life Insurance policies are of great help in an untoward incidence like in the death of the insured. In United Kingdom any person in the age group of 18 and 66 can avail life insurance policies and the premium will be paid through direct debit and the policies do not have value for cash-in. There are many questions that pop up in your mind while searching for the right kind of policy for self. The first and foremost thing that comes to your mind is how much will be the cost of taking up a life insurance policy.

The cost of taking up a life insurance coverage starts from euro 5 a month and depends on your financial condition or how much premium you can afford to pay at each month. The amount of premium that you may have to pay when you buy a life insurance policy is decided by many factors like age, illness, any other medical history and if you are addicted to smoking or drinking. The type of life insurance coverage that you planning to take, also decide the premium amount. If you want to calculate the premium amount that you may have to pay for the term you are planning to take the insurance, multiply the monthly premium with 12 and then for the term you have taken the policy for. Example:

Monthly premium – Euro 5

Term – 25 years

Premium amount = Euro 5 x 12×25 = Euro 1500.

There are many websites which helps you know about the various prices offered by various companies. You can also compare the various quotations by different companies at one place. Most of the life insurance companies provide quotes for free which helps you in taking the right policy and within the range of your budget. The premium you pay also depends on the type of cover you planning to take up. There are mostly two choices for cover, level and decreasing cover. For level cover the premium amount remains the same and the lump sum amount which is payable also remains constant. However, in decreasing cover, the lump sum amount that will be paid decreases with the term of the policy. Thus, the amount of money paid in the first year of the policy will be greater than that paid in the final year. The cost of the life insurance will also depend on the fact that it is taken for single person or for the family.

Life Insurance Benefits

Life insurance is an insurance taken to insure one’s life and to make sure that after him the dependents do not face any financial crisis. This is an assurance to oneself that their loved ones will live a good and happy life even after the death of the insured. The biggest benefit of having life insurance is that your survivors will be provided in the event of his death. With premium as less as Euro 5 you can give secured life to your near and dear ones even after your death and this gives a peace of mind. There are many pros as well as cons of taking up a life insurance policy, some of them are mentioned below:

  • Peace of mind when you are living and peace of mind for your survivors when you are gone.
  • Life insurance coverage provides you with financial stability and protection for your dependents and in case of terminal illness it even protects you financially.
  • Life insurance coverage also provides coverage in case of serious illness
  • There are regulations which protects your rights and hence taking up life insurance coverage is safe
  • Your survivors can get a lump sum money very fast making them a bit secured
  • There is also an option of taking up a life insurance policy which will provide a tax-free payout.
  • Permanent life insurance policy covers the insured for all his life and there is no term limit and this is beneficial for all those who do not have any health problems and can live for long.

Everything that we do in this world has both pros as well as cons. Some of the disadvantages of taking up life insurance policies are:

  • The life insurance policy can be highly expensive if the person seeking insurance is terminally ill or suffering from serious illness. It can also be high for the elderly person looking for a life insurance policy.
  • This policy is of no use if the person seeking insurance has no dependents or family
  • The worst part of life insurance especially term insurance is that you may outlive the term period and receive no benefits.
  • The saving and investment accounts will give you better and regular returns than the endowment policy unless the insured dies.

Life insurance policy is a good investment if you have dependents and is a must for family person to secure their future and be on the safer side.

 

Joint Life Insurance

Joint life insurance is a policy which is taken to cover the life of two peoples together rather than taking up single policy in each name. It is taken in the name of two people and hence is cost effective. In this kind of coverage the lump sum amount is paid after the first death and the coverage ends while in some case both the death are insured and the benefit is paid to the beneficiaries.

The most common financial partner will include:

  • Husband and wife (any mortgage and children as beneficiary)
  • Partners like civil partner, live-in partner and the beneficiary would be children and mortgage
  • Roommate and the only beneficiary can be mortgage

The joint insurance policy lands in trouble when the relationship ends or divorce happens between the couple. It is very difficult to divide the policy between two especially when they go into different relationships. In this case the policy mostly ends and mostly in the case when one of the two insured stops the payment of the premium. In this case it is favored to buy two single life insurance policy so that there would be two different pay outs, one for each of the policies

There are different types of life insurances that you can get along with joint insurances:

  • Level Term Insurance – In this the insured chooses to end the policy when the financial responsibility of their partner reduces or is nil, like when the children dependency gets over. In this the amount for which the insured is covered remains the same for the entire term.
  • Level term Insurance along with coverage for critical illness – In this type of insurance that covers both life as well as critical illness. One needs to check if they cover the life insurance after paying out for critical illness. Most of the companies cover heart attack, stroke and cancer as critical illness.
  • Decreasing term life insurance and Decreasing term life insurance with critical illness- In this the covered amount decreases with the decrease in the term of coverage while the one with critical illness pay out if the partner is diagnosed with some critical illness.
  • Whole-of life insurance is a type of insurance in which the person is covered for whole of their life and most of the company do not allow joint insurances and the term ends once with the death of any one of the partners.

FAQ in Life Insurance

When you plan to take up life insurance coverage a number of questions pop up in mind and you will definitely look for an answer to them. Most of the life insurance companies have these frequently asked questions answered on their websites and the customers can always go through them and find answers to their questions regarding life insurance. It is always better to clarify the doubts before you take up any insurance policy. Some of the most commonly asked questions and their answers are as below:

  • The first question that pops out is why do I need coverage for life?
    The life insurance is necessary so that your family and dependents are financially secured after you are dead.
  • How much life insurance is required?
    It is mostly advised that the earning member of the family should buy an insurance policy which is ten times their annual income.
  • From which provider should I buy the life insurance policy?
    The life insurance policy is a long term investment and hence one should look for a company that will be around for at least 20 to 30 years to give you the assured benefit if the need arises. One should also look at the financial stability rating of the company from which they are buying the policy.
  • What is the advantage of taking Term Insurance?
    It is the easiest of the life insurance policies which can be bought for a term of 10,15,20,25 and 30 years. The premium remains the same for the entire term and in case the insured dies within the term period the beneficiary is paid a lump sum amount without any lengthy process and hassles. The premium is comparatively less and is easy to afford.
  • Is term insurance affordable?
    The term insurance has become very popular with people nowadays as its premium is very less and is easily affordable. The customers are given the facility of paying the premium monthly, quarterly, and yearly or at one go.  This flexibility in payment of premiums makes it easily affordable.
  • Who all can be named as beneficiary?
    The insurance company only allows those persons as beneficiary who are dependent on the insured financially and those whose money you owe and need to be paid back. Friends, relatives and acquaintances cannot be beneficiary. However, charity can be a beneficiary if there is a history of you giving away charity.