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Finding Best Life Insurance Providers

Coming to terms with the loss of a loved one is tough enough without adding financial hardship to the burden. For such reasons, most people choose to have some form of protection, such as life insurance. Life insurance offers financial protection to replace earnings. It can pay the mortgage and household bills and provide your family with financial security just when it's most needed.

Points to consider

Do your sums - At a glance it is difficult to put a price tag on someone's life. There are ways one can asses or work this out. We can call it Financial Check. In order to determine the amount of life insurance your loved ones would need, we have outlined few steps:-

Gather all your household income and outgoings.
List all your outstanding debts like mortgage, car and other personal loans.
Does your employer provide death in service benefit. If so how much?
Do have any other life insurances? If so, add all sums insured.
Now work out how much your loved one would need to have a reasonable standard of living for the future. Remember, if you have young children then you'll need to cover the cost of childcare in the event of the death of a non-working partner.
Work out whether your dependants would require a lump sum? If yes how much?
Work out whether they would need an income - how much and for how long.

Now find out what types of Life Insurance policies are on offer. Life insurance, also known as life assurance, pays out a lump sum on the death of the person insured. It can be taken out on a single or joint life basis (see Step 6). There are two types of life insurance: term insurance and whole life. The easier and simple one is term insurance.

Choose The Cheapest

Term insurance is the cheapest form of protection. It pays out a fixed amount if you die within a specified period defined as the "term". It is not investment based, and therefore aquires no surrender value. In other words, at the expiry of the term there is no maturity or cash value. If you stop paying the premiums during the term, the policy ceases and there is no cash available. If death of an isured person occurs outside the term, there's no payment, i.e. if you had a five years term assurance policy and you died in say sixth year, there is no payment.
You can choose to have permanent term insurance or decreasing term insurance. With permanent the amount you are insured for remains the same throughout the chosen term period. Some insurance companies offer renewable and convertible term insurance policies. Renewable gives you an option to renew the olicy at the end of term without needing to provide any further medical evidence. Convertible gives you an option to convert to a whole life or with profits policy. With the decreasing term insurance, the sums insured decreases. This type of policy is often used to pay off a mortgage, known as Mortgage Protection Policy.

Combining mortgage and life insurance
Though endowment is virtually dead now and is not offered by most insurance companies. However, should you happen to have an endowment mortgage, life insurance is automatically included as part of the package. On the other hand, should you have a repayment mortgage, the cheapest option is Decreasing Term Life Assurance (also known as mortgage protection). This type of policy is designed just to pay off your outstanding mortgage debt. The more you pay off over time, the lower your potential insurance payout.

Monthly Income Policies
If you require monthly income, then you can look into family income benefit policies, which will pay regular amounts to your dependants instead of a lump sum. Income can be paid monthly, quarterly or yearly, depending on the policy.

Whole Life Insurance
There are two types - with profits and without profits Whole Life Policies are designed for those who want life insurance cover for an indefinite period instead of a fixed term period. On death, a whole life policy pays out either a minimum guaranteed sum or the investment value that's built up from the money you put in. But it also has a cash value, which you'd get back if you cancelled the policy. Cashing in early years may not have much or any cash values. Whole Life Policy premiums are more expensive than term life premiums. The reason is that such types of policies are certain to pay out. With some policies you pay the premiums until you die, while others stop at a certain age. Whole life policies are often used for tax planning (see taxation below).

Joint Policies
Couples can go for separate or joint policies. A joint policy will pay out on the death of the first person. It may be cheaper but is only really suitable if you would need the same amount of cover for both of you. It's worth shopping around and comparing quotes for both single and joint cover.

Taxation
On death of a person, life insurance payouts become part of your estate. If your estate is valued at more than a certain level (£285,000 in the 2007-8 tax year), then you will have to pay inheritance tax (IHT). It is possible to write your life insurance policy in trust so that the money doesn't form part of your estate from an inheritance tax point of view. The payout can then be used by the person who inherits it to pay any IHT due on the rest of your estate. The most types of policies used are whole life second death policies. Second death policies are mostly taken out by married couples on joint life basis and is payable to your children/beneficieries on the death of the second life. This is a complicated area, and you should seek expert advice of a tax planner.

Buy your life insurance cover
The cheapest way to get the right cover to suit your circumstances is to go through a qualfied Financial Adviser. Our online links will get you to fill basic enquiry form upon which an advisor will contact you to discuss further. You can buy online but it's advisable to talk to an expert first.

All life policies have a 14-day cooling off period in which you can examine the policy and change your mind if you choose.

Compare and Select from 100's of low cost Life Insurance policies

Planning for the Uncertainties

It is difficult to protect oneself and the loved ones against the uncertainties of life. However, a wide range of insurance policies are available that can be useful financially in the event you have lost your ability to work through serious illness, injury or accident.

Quick Financial Check
Dig through your records and rumble through your paperwork. Chances are you may already have something that you have forgotten about. This could be a mortgage payment protection policy (MPPI) that you took out when you arranged your mortgage. Check out your (and your partner's) earning capacity as well as check with your employer(s) what protection they would offer in the event of illness, especially long-term illness. Add up any savings you have. Now you should have an idea of how much money you may require in the event you or your partner or both together are unable to earn for a time or pemanently.

Income Protection Insurance
The main type of insurance to cover your income if you are unable to work through sickness, accident or injury is income protection insurance, also known as permanent health insurance (PHI). This pays out a regular tax-free income (normally 50-65% of your earnings). Depending on your occupation or type of work you do, payments usually start after a deferred period of between four weeks and a year, during which time you'll need to depend on other resources. The longer your deferred period, the lower your premiums. Income protection can be expensive. The premiums you pay will depend on your age, the type of work you do (low risk or high risk of injury), the amount of cover and the deferred period.

Covering sudden ill health
Critical illness insurance pays out a single tax-free lump sum if you're diagnosed with one of a defined list of serious or life-threatening conditions. Policies vary but typically the list will include cancer, heart disease, stroke, multiple sclerosis, and total and permanent disability. This cash can help ease financial worries for you and your family while you are being treated, which, in the event of a serious illness, can be a lengthy process. You could use the cash to pay off a large debt such as your mortgage. The younger you are, the cheaper this cover costs, because the less likely you are to develop a serious illness. It's best to see this policy as an addition to permanent health insurance (PHI)/ income protection insurance. It doesn't pay out for accident or injury or many common problems such as back trouble or stress, only serious illness. Always make sure you know which illnesses are covered and which ones aren't.

Covering your mortgage
If you simply want to be able to pay your mortgage if the worst happens, you can take out mortgage payment protection insurance (MPPI). MPPI - also known as accident, sickness and unemployment insurance (ASU) - offers peace of mind by paying off your mortgage if you are unable to work following an accident, sickness or unemployment. It usually only pays for 12 months (occasionally 24 months). Rates vary enormously, so if you want the cover always shop around and don't just opt for the policy your mortgage lender offers. Always check the exclusions (the things that aren't covered) when comparing policies. Compare prices too with permanent health insurance (PHI), which may offer a better all-round deal.

Debt protection
Payment protection insurance is designed to cover the cost of personal loan repayments or minimum monthly credit card payments if you are ill and unable to work, or are made redundant. If your debts are small or you could cover repayments using savings or help from relatives, this might be an unnecessarily expensive option. Look hard at accident insurance You get often get personal accident insurance offered free to encourage you to buy other financial products. So don't be surprised that what's covered may be limited. Some simply pay a modest lump sum if you suffer an injury specified in the policy such as the loss of an eye or a limb as the result of an accident. Look for what's not covered.

In Conclusion - The options
Replacing income can be an expensive business, so think carefully about which type of insurance best suits your financial situation. If you're not sure then seek independent financial advice before signing on the dotted line.

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Welcome to Shainik Financial Services, United Kingdom

Finding Best Life Insurance Providers

Choose The Cheapest

Planning for the Uncertainties

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