A life insurance policy is one of the most important pieces of financial cover you can arrange, especially if you’re looking to safeguard your family’s future after your death.
It’s interesting, then, that many people aren’t fully aware of all the benefits and drawbacks of many life insurance policies currently on the market. A lot of us simply look at the bottom line and make our decisions based on the amount we’ll be covered for, but there are other factors which should be taken into consideration when examining the different options.
Benefit: Policy Flexibility
Flexibility throughout the policy’s duration is an important option to have – you don’t want to be locked into a rock-solid plan for twenty years without the ability to change certain aspects of it as your circumstances change.
For example, you might want to increase or decrease your benefit amount or add your partner to your plan. A provider like British Seniors, with its Lifetime Payback Guarantee plan, will allow you to do this quickly and easily.
Drawback: You May Pay More Than You Receive
One of the predominant complaints about most life insurance plans is the fact that many of them allow customers to pay in more money than their families would get back upon their death.
For example, a customer paying £20 per month for £1,000 benefit on death would have paid in more than they have contributed towards the policy after 51 months.
However, British Seniors Insurance Agency has listened to its customers and taken steps to resolve the issue by guaranteeing that the benefit amount your family receives will never be less than the monthly premiums you pay in – any claim paid would be the greater out of your chosen benefit amount or the total monthly premiums paid to date.
Benefit: You Don’t Have to Undergo Medical Exams
The majority of life insurance policies don’t require customers to undergo medical examinations or questionnaires – these can be invasive and off-putting, even though they are seen as a necessity to ensure that the insurance providers aren’t taken advantage of.
Instead, policies like the Lifetime Payback Guarantee make the first two years of the policy non-payable if you die within that time period. However, the premiums paid up to that point would be refunded, so you still wouldn’t end up out of pocket.
Drawback: You Can’t Cash The Policy In
Some insurance policies (not necessarily life insurance policies) may allow you to cash in at certain points if you decide you no longer want to carry on with them, meaning the money you have paid in up to that point is refunded or the benefit you are eligible for is paid.
Life insurance policies will not allow you to do that unless you cancel within two weeks or a month of signing up (dependent on the specific policy terms and conditions).
Benefit: Life Insurane Payouts Are Non-Taxable
Unlike other types of inheritance, the majority of life insurance payouts are classified as tax-free. This ensures that your family receives the full benefit amount upon your death without any interference from HMRC.
When they may be relying on it to pay bills and funeral expenses, signing up to a policy becomes an extremely important decision which should be carefully considered.
There are a lot of details to consider when it comes to choosing a life insurance policy – you cannot simply make your choice based on the amount your family will receive when you die.
You need to ensure that you’re not going into the policy expecting to cash in when you can’t, for instance. Read all of the terms and conditions carefully so you know what you can and cannot do within your policy so you don’t run into any surprises along the way.
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