Thursday, 21 March 2013

Insurance London-Life insurance and protection policies in London and the UK

Life insurance and other protection policies are designed to protect you and your family against the possible occurrence of unforeseeable mishaps or from the inevitability of certain life’s natural events.
Types of life insurance include term assurance, whole of life assurance, income protection insurance, critical illness insurance, accident, sickness and unemployment insurance.
The type of life insurance or protection policy and amount of cover would vary from person to person. It may largely be dependent on an individual's particular circumstances and requirements; such as age, dependants, level of  income, financial liabilities etc.

Term assurance provides cover for a fixed term, with the sum assured payable only on death. Term assurance premiums are based primarily on the age and health of the life assured, the sum assured and the policy term. The older the life assured or the longer the policy term, the higher the premium.

The principal type of life insurance most commonly in use at current is unit-linked whole of life, which offers a variable mix between investment content and life cover.

Whole of life assurance premiums is a scenario whereby the initial premium is usually fixed for 10 years and is generally reviewed at that point to see whether the growth of the investment fund is sufficient to maintain the same premium level. It is possible that the premium may have to increase, or sum assured reduce, at that point. Product types available for whole of life assurance include the following: with profits whole of life; unit linked whole of life; low cost whole of life; universal whole of life and non-profit whole of life. 

With-profits whole of life assurance.
This type of policy guarantees to pay the sum assured on the death of the life assured at any time. The policyholder pays an extra premium to allow participation in the “with profits” fund, which works on a traditional “with profits” basis, in that the sum assured is increased annually by the addition of a bonus – called a reversionary bonus.

Unit linked whole of life assurance.
With this type of policy, the ‘mix’ between life cover and investment is decided at the outset. Each monthly premium is used to buy units in a selected fund at an offer price.
Then every month, the insurer calculates the cost of the life assurance for the next month only, and deducts this charge by ‘cancelling’ just enough of the policyholder’s accumulated units to pay for the cover.
 In this way, the policy grows in value as the number of units held in the policy accumulate and (hopefully), the value of each unit also increases.

Universal whole of life assurance.
This type of policy is a unit linked whole of life plan with further options. As well as cancelling units to buy life cover, they can be cancelled to buy components such as: permanent health insurance, critical illness insurance, personal accidents benefits, and hospital system benefits.

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