What Can You Choose From?
Planning ahead for the future is the best way to enjoy a stress-free present. While many of us rarely think about plans such as life insurance, the fact of the matter is that we will all become old at some point. This is why choosing the best policy is important at any age. We will therefore take a look at the types of plans that are available as well as some of the unique attributes associated with each one.
What Types of Life Insurance Policies are on the Market?
Life insurance plans can be broken down into a handful of categories and each of these is meant to cater to a specific client. The most easy to understand is known as level life insurance. In this case, a lump sum will be paid out to all recipients in the event that the policyholder dies. As this sum will not change, it is easy to predict how much money will become available to all beneficiaries.
Increasing term life insurance is another option. The main intention of this plan is to help combat the effects of inflation over time. So, the mean amount contained within the policy will slowly rise. There are two ways which this can occur. The first will follow what is known as the Retail Price Index (RPI). As the prices of common goods and services rise, so will the value of the policy. Or, the lump sum might simply increase by a fixed amount every year.
Renewable policies are also quite popular. These plans can be renewed once the term limit has expired. However, the key here is that the recipient will usually not need to obtain another health exam. Keep in mind that renewable policies might not be available to those who have pre-existing conditions. This is why it is best to check with a few different providers.
The most comprehensive plan is known as whole-of-life insurance. This policy will provide a lump to sum to all family members and benficiaries at the time of your death. It can also be used to offset the taxes that would otherwise need to be paid towards inheritance tax. Of course, this assumes that the premiums are paid throughout the lifespan of the policy. The only potential downside is that these premiums can sometimes be quite high.
Choosing the Right Plan
The first step involves having a doctor analyse your health. The level of coverage that you will be offered revolves around this factor. Those who are young and healthy are more likely to be able to choose from a wide range of options. Secondly, consider the premiums that need to be paid and the entire lump sum that the beneficiaries will receive in the event of your death. On a final note, check to see how many individuals can be included within the plan and if this number can be modified in the future.