Nobody can predict the future. Life can be fragile. It’s scary to think about the end of life and how it will affect the friends and family we left behind. You might wonder in your mind, in the unfortunate event that I fall ill and pass away, who is going to pay off my financial commitments and how will my loved ones cope in such a difficult time?
Subsequently, you’ll probably ask yourself: “Is there anything I can do in there here and now to make this time easier for them in future?”
This is the purpose of a life insurance company.
The insurance companies are happy to start a legal contract which states, if the policyholder pays a certain amount of money a month the company will pay a large amount of money to the policyholders’ family or peers in the event that they pass away.
This article will help you understand a smart way to compare life insurance for seniors and what you should be aware of when taking out a policy.
How Much Do You Need and How Much Should You Pay?
The exchange between the insurer and policyholder is simply, money and insurance.
The insurer is going to want to spend the least and gain the most. Similarly, the policyholders (you) are also going to want to spend the least, but still have insurance with a substantial payout: enough to protect their loved ones.
In short, you should have enough money to cover your current financial commitments, and/or a funeral for yourself to make things easier for your family. It would be worth Googling “compare insurance,” in order to find a service which will allow you to compare premium rates.
But in general, no matter what you want to provide your family with, a payout that will actually cover any crushing financial burdens.
The Types of Senior-Term Insurance Plans
There are three types of coverage companies have to offer.
Each of these differs in details, such as the extent of the premium you have to pay and the payout:
- Level-term insurance
- Decreasing-term insurance
- Increasing-term insurance
Level-Term Insurance
Level-term coverage means the policyholder will pay a premium for the duration of their term and if they are to pass away within that period, the insurer will pay a fixed sum of money that was agreed at the beginning of the contract to the dependents of the policyholder. The payout for insurance coverage like this normally ranges between £120,000 and £180,000 and may cost you around £20 a month depending on your current health, if you smoke, for example.
Decreasing-Term Insurance
The payout for this option will decrease as you progress through the term. Somebody would usually take out this type of cover if their aim is specifically to pay off financial commitments, such as a mortgage, because for the premium will be cheaper and seeing as the payout decreases with time, it will normally match the mortgage value. So you know it will always be paid off if you pass away, which is also going to be decreasing as you pay more towards it. This type of cover is usually cheaper than a fixed-term plan and it will still ensure that your loved ones don’t have to stress about your financial commitments in an already difficult time.
Increasing-Term Insurance
This is designed to compensate for inflation and other rising costs of living, the payout will normally increase by a certain percentage each year or similarly it will be mirrored to the Retail Prices Index (RPI) measure of inflation. This type of cover is really relative to people who have a larger budget as premiums will be higher.
What Affects How Much You Pay for Insurance Premiums?
Variables that can affect the price of your premium could be:
- Your previous illnesses/health diagnoses. If you have had lung issues, asthma or any other problems that could reduce your life expectancy this will increase your premium as it increases the probability the insurer is going to have to pay out. Regardless, if your issues are still a threat, the insurer will still see it as a potential hazard.
- Smoking or dangerous sports. If you are known to smoke or have smoked in the past 12 months, the insurance company will suspect the probability of you dying is higher due to lung issues, cancer, or other health issues that are accompanied with smoking. As far as dangerous sports go, if you are risking your life even on a professional level, you are increasing your probability of death in the eyes of the insurer.
- Your age. As you grow your body will deteriorate, or you could be more vulnerable to deadly illnesses, so insurers increase your premium. Seems harsh, but it’s reality.
- Previous drug use. Drug use can have effects on your future mental and physical health. Especially if dietary or other health requirements have been compromised in the participation of such activities.
- Type of coverage you take out. Certain coverage, such as increasing-term insurance policy, takes into consideration the rising rate of inflation by comparing to the current policy price.
There are comparison websites that will search through hundreds of life insurance companies and find you the best deal suited for you. However, you should do your own research into what company would be best suited for your specific needs and lifestyle in order to get the best result and protection from your life insurance.