The Cost Of Life Insurance Gets Lower and Lower

Summary
There are various sorts of cheap life insurance policy available in the market. Many people are now reaping the benefits of more economical monthly premiums by changing to pension term assurance (PTA) because of the tax benefits available on the cost of this type of policy. However it is not suitable for everyone.

Recently it was revealed that the cost of life insurance plans has fallen dramatically in recent years. What sort of policy is most suitable for people like you?

Term policies are the simplest typeof life insurance cover – you pay a premium every month for a set value of cheap life insurance for an agreed number of years that the policy will be in force for. If you die, it then pays out a cash sum.  If the insurance policy terminates and you have survived, no money is paid out.

There are several categories of term insurance: “level” term where the payout is a fixed amount; “decreasing” term, which is always slightly cheaper because the benefit to be paid out falls each year. Usually this type of policy is taken out to cover a mortgage.

Another option is “increasing” term insurance where the insured sum slightly increases each year during the course of the term ; this can be a good way of protecting your financesagainst inflation.

Joint life cover is very benefitial for couples who require both of their salaries to pay the mortgage because a payout is made if either partner were to die.

Family Income Benefit (FIB) offers the client’s beneficiaries a monthly, quarterly or annual income from from the date the policyholder dies until the policy terminates rather than paying out one single capital paymemt.

The amount of insurance you need will be dependent upon your own individual financial circumstances. Most large and medium-sized companies offer a death in service benefit which usually pays out three or four times to your partner if you die whilst being employed. Hence if you are reasonably confident about remaining in employment, you may reach the conclusion that paying for additional life cover with another arrangement was unnecessary.

The cost of life cover depends on numerous factors, namely the type of policy, the length of its term, and certain health criteria, and certain health questions – whether you are obese or whether you smoke. Insurance companies are also increasing premiums for those who are obese.

There are big advantages to switching to pension term insurance. If you already have a term insurance plan which pays out a lump sum, you can reduce the cost of  your monthly premiums by shifting to a pension term policy. This is is because under new pension regulations, most customers qualify for tax relief on the money they pay for life insurance if they opt for a pension term assurance (PTA) policy. This type of insurance is basically the same as standard term insurance in so far as it is still protection-only. So it pays out if you die within the insured period but if you survive, the policy is worthless.

However, not everyone will be better off by switching to PTA. For instance, if you bought your life cover a long time ago, the higher premiums that you may now have to pay because of your increased agecould well outweigh the benefit of tax relief. Similarly, if you have been ill since you bought your cover, you will probably be better off staying with your existing life insurance policy.