Monthly Archives: April 2011

Life quotes and protecting your interests

In the insurance industry, quotations for life insurance are sometimes abbreviated to “life quotes”.

What that term means is that you are seeking to ensure that, in the unfortunate event of your death, some money would be available to those you have left behind.

Life quotes come in all different shapes and sizes in order to make them suitable for many of life’s classic situations including:

  • someone seeking to protect their family home in the event they die before a mortgage is paid off – in the case of a standard interest and capital repayment mortgage, a decreasing term life policy may be suitable, as the amount you will require to pay off your mortgage, will decrease over time (often meaning that this type of life cover is typically lower cost than other options);
  • someone with the same objective but with an interest only repayment mortgage may find that a fixed lump sum payable upon their death would be more beneficial – that is typically described as level term life insurance;
  • if you are determined to leave a sum of money behind you, irrespective of your age at death, then you may wish to look at life quotes for what is called “whole term life insurance”.

There may be a range of variations on these themes and policies may be able to offer additional options to help you cope with some of life’s vagaries. For example:

  • the sum insured today may not be worth, in buying power terms, exactly the same in 15, 20 or 25 years time if inflation has taken its toll – so some policies may offer an indexing facility to ensure that your sum insured increases in line with various indices;
  • if you are ill and unable to earn, you may worry how you will be able to continue to make your premium payments – which is why some policies may provide a ‘waiver of premium’ facility whereby your payments would be covered in such eventualities;
  • if you become critically ill, having a separate but linked policy, may pay out an immediate sum that is not death related – it is called critical illness cover and it will typically be listed separately to life quotes. (Do note that a standard policy will only pay out once, so if you survive a critical illness and then die ten years later, your loved ones will not receive a payment. However, there are – more costly – combined life and critical illness insurance policies that may pay out for a critical illness and then death – this is called ‘double event’ cover).

In uncertain economic times, there may be a natural inclination to search for cheap life insurance quotes.

Keep in mind that what is cheap for someone else may not be cheap for you, if it offers a form of cover that is not suitable or optimal for your particular circumstances.

Cheap life insurance quotes may be attractive but it might be prudent to concentrate initially on assessing the cover provided by the policy.

Getting hold of appropriate life quotes might be the first step on the road towards increased peace of mind that you have protected the interests of your loved ones.