Why is life insurance needed?

Are there different types of life insurance?

Will the cost of life insurance vary for different people?

If policyholders outlive their insurance plan could they be reimbursed?

Do pre-existing medical conditions affect policies and premiums?

Can joint life insurance be taken out with a partner?

Will critical illness be included in an insurance policy?

Does smoking affect the cost of a policy?

Q. Why is life insurance needed?

A. A life insurance policy helps ensure financial stability for loved ones should the worst happen, and may usually be considered for:

• Replacing lost income of the primary earner
• Covering mortgage repayments after death
• Covering children’s education fees
• Repaying debt and creating financial security for those left behind

Q. Are there different types of life insurance?

A. Yes there are several different types of life insurance. Those seeking life insurance have the opportunity to research the various policies available and contact the individual insurer to see which one might be suitable for their needs.

Q. Will the cost of life insurance vary for different people?

A. Yes. Insurance providers assess the risk linked to each individual. This basically means how likely it is they will have to pay out in the event of death. With this in mind - age, occupation, health and lifestyle are all contributing factors to the amount paid for insurance. As a fictitious example, an 80 year old chain-smoking sky diver would unlikely be covered due to the expense!

Q. If policyholders outlive their insurance plan could they be reimbursed?

A. Usually, money put into a plan is purely for insurance and there is no savings content or cash-in value at any point. However, there are policies that can accumulate a cash value over time. Some of these policies can be surrendered, and the policyholder would then be entitled to at least a portion of the cash value.

Q. Do pre-existing medical conditions affect policies and premiums?

A. Some do, some do not. Life insurance providers assess the risk involved in offering a policy. Every medical case is different and definitions between providers can vary so it could be worth shopping around for life insurance or contacting insurers to see which conditions are covered and vice versa.

Q. Can joint life insurance be taken out with a partner?

A. There are joint policies available to cover individuals and their partners. Joint insurance is usually available on a ‘first death’ basis, which means only one pay-out is made upon the first death in the partnership. After this pay-out, the remaining individual may no longer covered by the policy. Some policies work on a joint life ‘seconddeath&rsquo basis in which both deaths in the partnership would be covered and a pay out is made on the second death.

Q. Will critical illness be included in an insurance policy?

A. This varies according to the insurance provider. If a policyholder is suddenly struck down with a critical illness, this cover could help ease financial pressures during a difficult time. Critical illness cover may already be included in a policy but, if not, can normally be added to a Level Term Insurance or a Mortgage Term Insurance policy. Critical ilness cover can also be purchased as a stand alone policy.

Q. Does smoking affect the cost of a policy?

A. Insurance providers weigh up the likelihood of a claim being made and price the policy accordingly. As medical research has shown that smoking can significantly damage health and potentially lead to life threatening conditions, premiums could be higher.