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In some respects, over 50’s life insurance isn’t much different so some other forms of life cover – it exists to offer you and your family a degree of financial protection should the worst happen.

Yet in other respects it may be – and those differences relate to the typical nature of people’s lives, as they get older:

• if you are in your younger years, perhaps with a young family and a heavy debt burden (mortgage etc), then you may typically be looking for a different profile of life cover than someone who is older and with perhaps less extensive long-term financial commitments;
• by contrast, if you are over 50, you may incline towards a form of policy that you know is open-ended, in other words, it will pay out a fixed sum upon your death, at whatever age you die;
• someone younger and with a larger debt profile to cover, may require a larger sum insured but one which is only in effect for a number of years (called the term of a policy and something that may typically be seen running in parallel with a mortgage);
• over 50’s life insurance that is unconstrained by a term, is sometimes referred to as whole life cover or traditionally, life assurance, as assurance is against something that you know will happen eventually whereas insurance is cover for something that may happen in the future;
• nobody can really decide what form of over 50’s life insurance would be suitable for you – only you can decide that having carefully reviewed your financial position and that of those you care for, however, it may be prudent to keep in mind just how expensive things such as funerals may prove to be;
• unfortunately, death isn’t the only thing that you may need to worry about – if you are still responsible for supporting your family through income earning, then something such as critical illness may deprive you of the ability to continue working, so it might be sensible to consider loss of income cover insurance at the same time;
• in our modern society, increasing numbers of people are living and working longer and that is something that implies that they may have longer-term financial commitments than was the case for the over 50’s of previous generations – that may be another reason why it may be sensible to look further at your options for over 50’s life insurance.

Some forms of insurance cover, such as critical illness and life, are relatively well known. What is arguably less well known is serious illness cover insurance.

Here is a brief overview:

• critical illness cover provides financial reassurance in the event you were diagnosed as having a critical and possibly life-threatening condition;
• of course, it is not only very grave illnesses that may rob you of your ability to work and earn money for yourself and your family – there are a whole range of conditions that may do so but which may or may not be defined as being critical;
• this is the domain where serious illness cover operates – providing insurance support against the financial effects of a very wide range of serious conditions;
• it differs from critical illness cover in several respects, including the fact that it will pay out multiple times whereas critical cover is typically a one-off payment cover;
• it is also based upon the concept of severity and the amount it pays may be linked to the severity of your condition;
• this cover also typically pays out on your diagnosis, whereas critical illness cover may have a qualifying period of a few days and weeks after diagnosis before it will typically pay out;
• traditional forms of life insurance cover will typically not payout in the event of illness as they are covering a different form of risk, however, it may be possible to combine life insurance cover together with serious illness insurance to provide a broader-based protection;
• there may be a significant difference in the illnesses that a policy may cover and it is important to think-through your requirements before finally selecting a policy;
• remember also that all insurance will bring with it, terms and conditions – for example, you may find it difficult to obtain cover for an illness that you have already been diagnosed with (though multiple payments from a single policy may be payable once it is in force);
• if you are ill, the last thing you may want on your mind is money troubles – that’s one reason why it may be advisable to find out more about serious illness cover.

photo credit: Violette79 

This is a guest post by Andre, who is part of the team that manages Australian Credit Cards, a credit card comparison service with an extensive personal finance blog.

 Life insurance is basically a policy that people purchase from a life insurance company. Think of it as a financial safety net; it contracts the insured and the policy owner, so that when the insured dies, the designated beneficiaries of the policy holder can have the claim to the agreed payouts.

 You’ll have to understand what life insurance is all about before you begin to realize why you need one. There are two types of Life insurance and each with its own subtypes:

 TERM INSURANCE

Term Life Insurance forms the foundation of every life insurance policy. It provides life insurance coverage for a specified length of time in exchange for a specified premium- in the event of death and nothing else. This means the insurance company only pays you the promised amount if you die within a fixed number of years. The policy does not accumulate cash value, and when the policy reaches its deadline, the coverage disappears.

Various insurance companies offer term insurance based on three important factors: the face amount or protection benefit, which can remain constant or decline, the premium to be paid which can remain level or increase, and the term of the coverage term which can be for one or more years.

There are three common types of term insurance:

1. Level Term policy has the premium locked in for a period of time for more than a year and can be budgeted long term.

2. Annual renewable term is a policy that lasts for one year but the insurance company will issue a policy of lesser or equal amount regardless of the insured’s insurability and with a premium placed for the insured’s age at that time.

3. Mortgage Insurance is an insurance policy which protects the policy owner for losses due to the default of a mortgage loan. The face amount usually equals the mortgage amount on the policy holder’s residence, so the mortgage will be fully paid if the insured dies.

PERMANENT LIFE INSURANCE

Permanent life insurance is wherein the policy is the life of the insured; when the policy expires, the payout is assured and the policy increases cash value. The face amount of any life insurance policy is the amount of money the insurance company promises to pay as a death benefit if the insured suddenly dies while the policy is in effect.

 The four basic types of permanent insurance:

1. Whole life coverage. This policy protects you for your entire life and not just for a specified period. Your death benefit and premium will usually remain the same. It can also build cash value, and is tax-deferred until you withdraw or borrow against it.

2. Universal life coverage. Along with providing a death benefit, it also includes a savings vehicle. It’s like mixing a tax-deferred savings account, which also accumulates interests, with a term life insurance policy.

3. Limited-pay. In limited pay, the insured is given a specified period of time in which to pay the premium. When the time period passes, a premium will not have to be paid anymore, but the policy will still be in effect.

4. Endowments.The premium paying period in this type of permanent life insurance is shortened, and the insurance amount is paid within a certain period or when the insured reaches a specific age. This is why endowments are considerably more expensive than either whole life or universal life.

Now that you are oriented with the basics of life insurance, you will also have to know why you need it. Regardless if you have dependents or don’t really need to protect anyone or anything else, there are many reasons of how buying a life insurance can be beneficial to you. Here are some examples:

Mortgage protection

Taking out a mortgage is already a frightening prospect as it is. What more if you die suddenly, and you are the household’s only breadwinner. The person you are living with will have to continue the payments or they would be homeless. If you have gotten a mortgage insurance policy, which mostly are designed nowadays to pay out the entire amount of your original mortgage, regardless of how much you owe, you will not have passed on this problem.

Income replacement

When you die, your income dies with you. And with it goes the regular cashflow to pay your expenses. Protection insurance such as a life policy can be claimed to replace the lost income so the remaining dependents or survivor can maintain the same standard of living.

College funding

Life insurance can help fund your children’s college education even when you are already long gone from this world. If you die, the death benefit may be invested and likely grow the needed amount by the time your children enters college.

Other expenses

The last thing you want is to burden your dependents with all your present and future expenses. Your credit card debts, the car installments, and just the daily cost of living for your family, will be difficult to cover in the event of your sudden death. A Life insurance can be used to plan for final expenses such as potential medical bills, burial cost, and funeral expenses.

Peace of mind

Knowing that you have life insurance eases your mind and makes you confident that you can continue making your legacy even after your death.