Life insurance

Life Insurance

In your search for a cheap life insurance policy, make sure that you choose the right product as there are many different types of life insurance that are designed for very different purposes.

In principle, life insurance gets more expensive as you get older due to increased risk of claim. The cost of cover takes into account your age. For this reason if you are approaching a birthday it is a good idea to take out a policy before your birthday to obtain a cheaper policy premium. Read further below to understand what to consider when shopping for an online whole life insurance policy or with an agent.

Types of Life Insurance

Choosing which life insurance cover is best suited to you is dependent on a number of factors, and the life insurance you would like isn't always the insurance you are eligible for. Life insurance policies are usually underwritten by the life insurance companies and during this process underwriting factors considered are:-

With regards to Term Assurance policies there are usually two types to consider.

Level Term Assurance

Where the sum assured (the amount you are insured for) remains the same through the term (length of time) of your policy.

Decreasing Term Assurance

Sometimes known as Mortgage Term Assurance or Mortgage Protection, where the sum assured reduces over time. This type of policy is often chosen as cover for repayment mortgages as the amount owed on your mortgage also reduces over time, also as the sum assured reduces so does the risk to the insurance company and so a Decreasing Term Assurance is usually cheaper than level term assurance.

Read more information on decreasing term assurance policies and insurance premiums.

Along with your term assurance policy you can select additional cover such as life insurance with critical illness cover (though critical illness cover can be quite costly). Terminal illness is another additional benefit and some insurance companies will include this as a free additional benefit to your policy. This is not to be mistaken for critical illness as there are many differences between the two.

Critical illness cover

If you were to be diagnosed with a wide range of illnesses and injuries and survive for at least 14 days after diagnosis such as:-
* Third Degree Burns covering at least 20% of the body
* Blindness permanent and irreversible
* CJD (Creutzfeldt-Jakob disease)
* Loss of hands or feet permanent physical severance

As with all insurance products, always read the terms and conditions of the critical illness cover you are looking to purchase as they have very specific terms which you have to comply with to be eligible for a claim. Some critical illness plans also include free children's critical illness cover but again these have specific terms and conditions which must be adhered to.

Terminal illness

This cover is quite often a free inclusion on a life insurance contract and means that if diagnosed with a terminal illness with a life expectancy of less than 1 year the policy will be paid out in full. However, terminal illness is not usually available in the last 18 months of a life insurance contract.

Many people do not realise that the younger you are when you take out a life insurance policy, the cheaper your life insurance premiums will be. They also don't realise that, unlike health insurance, your premiums will remain the same throughout the term of your policy. So, common sense would say to buy your life insurance young and don't think of it as morbid, think of it as planning ahead.

Check your medical disclosures are correct

When you complete your life insurance quote always check the details are correct as they form part of your contract. Ensure that you have answered all questions as thoroughly as possible and don't worry about disclosing too much as the underwriters will decide what is relevant. If you fail to tell the insurance company something, when you come to make a claim you could in fact discover that your contract is void, any premiums that have been paid in the past will not be refunded and ultimately you will lose out. You may even find that the whole policy is null and void, not just the part you have not fully disclosed. If a financial adviser has filled in your Life Insurance application it is still your responsibility to check that all information is correct.

Possible medical requirements

If a medical condition is disclosed, or if your life insurance application is for a large amount of money (mortgage related or otherwise) a GPR (General Practitioners Report) a medical, may be requested. A mini medical usually consists of a height and weight check, blood pressure test and cotinine test (to confirm you are a non smoker ) or a Full Medical, which includes the same as the mini medical but also a Blood Test which can include a HIV test and medical summary can be requested. If you do not agree to take the tests then cover will not be provided. With regards to your GPR you have the option to request to see a copy of what your GP sends to the insurance company as per the Access to Medical Records Act (1990).

If you do have a pre existing medical condition this does not automatically mean that you will not be accepted for a life insurance policy. It may be that instead a loading is applied due to the increased risk to the insurance company, or an exclusion is applied meaning that you cannot claim for a certain benefit of the policy or anything relating to that specific condition. Exclusions and loadings may also be applied in connection to your pursuits or occupation if they are viewed by the company to be a risk.

Use our Life Insurance Calculator to decide what level of life insurance you should buy.

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Updated on 29th February, 2012

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