Life Insurance

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Life Insurance

Life Insurance offers valuable financial protection for you and your family, who are dependent on your earnings, in the event of your early death. It can also be used as a means of saving, which combined with the protection offered, makes life insurance unique amongst other financial products.

Saving & Protection

Life insurance in the long-term allows you to construct plans for long-term saving. Companies providing life insurance have long and wide experience of successful investment as well as providing protection in the event of your early death.

Endowment Insurance

Endowment insurance provides protection for your family and helps save for the future, although it is generally more expensive than protection insurance alone. That said it would aid your family's finances should you die, while at the same time it is a method of long-term saving.

First of all, you pay premiums for an agreed period, e.g. 10 or 15 years. At the end of this agreed period you will receive a lump sum, which is either the sum insured together with bonuses in the case of a with-profits policy, the lump sum is the return of all money invested together with the investment growth. If you die before the maturity date the insurance company will pay the sum insured, or the value of the policy at that time if greater.

With-Profits Fund

A with-profits fund is a joint investment - the money you pay in (the premium) is combined with other premiums and invested by the insurance company in a very wide range of assets, including stocks and shares, bonds, property and cash. The investment growth achieved by the with-profits fund is paid to you as regular and final bonuses are added to your policy.

Although growth and bonuses cannot be guaranteed in advance, it is likely that the latter will add to your sum insured, resulting in a good investment return over your policy period.

Who Can Sell Life Insurance?

In order for someone to sell or advertise any investments, they must be authorised by the Financial Services Authority (FSA) as either a company representative or an independent financial adviser. Insurance companies deal direct with potential customers either by telephone or through their sales persons (who will make his/her status clear by explaining what he/she is authorised to offer) but it is also possible to buy through independent financial advisers or other insurance intermediaries.

Assessing Your Needs

It is important to remember that a life insurance policy is a long-term commitment and not deigned for you to try and make an early settlement. Insurance companies and other financial advisers can help you decide what products are suitable for you. Never surrender a life insurance policy without taking expert advice.

Once you have chosen a policy you feel is suitable you will have to complete and sign a proposal form, which may ask about matters such as your age, occupation and health - all of which must be answered truthfully. Failure to do so can mean, in some circumstances that you will not receive a pay out.

Changing Your Mind

Most, if not all, insurance policies should include a "cooling off" period, which is usually at least 14 days. During this time you can inform your insurer that you do not wish to continue with the policy and receive a refund of any initial premiums you have already paid.