Things to Look for In a Life Insurance Policy
While it is not a very pleasant thing to consider oneâ€™s own death, taking the time to ensure that your loved oneâ€™s will be looked after should the worst happen can actually bring great peace of mind. Getting life insurance is the best way to do this. It is an insurance policy that pays out financial recompense to your family in the event of your passing, be it from accident or illness. There are lots of different policies on the market, all with different levels of coverage, cost and longevity. Here are some of the aspects of a life insurance policy to analyse when comparing different products. Loadings Loadings are parts of the insurance policy that attract additional costs because of their likelihood to cause death. The insurance company places an extra premium if they consider part of your lifestyle to place you at greater risk of claiming compensation from them. Loadings can include pre-existing health conditions that can shorten life expectancy â€“ such as diabetes or cancer â€“ lifestyle choices that affect health â€“ including smoking and obesity â€“ or occupations that represent a greater risk of premature death, either through high levels of stress or accident, such as comparatively dangerous jobs like mining. Exclusions If the insurance company considers part of your lifestyle too great a risk, they may be excluded from coverage in the policy. You will still be able to take out a policy, but it will not cover you should you pass away from the excluded condition. For instance, if your occupation is a skydiving instructor, the high risk of accident at work may mean the insurance provider excludes any claims arising from death at work from your policy. In such a case, if you died in a car accident, your family would receive monies. Charges for changes Individualsâ€™ life circumstances change over time. A life insurance policy taken out when young and single is unlikely to provide sufficient coverage for a married person with children. Changing circumstances are one reason why you should regularly review your policy, and when first taking out insurance check whether there are additional charges for changing the nature and the extent of coverage. Some polices, for instance, may charge a premium for adding extra children as beneficiaries. Inflation linked Check whether the policy is linked to inflation. At the minimum, it should rise in line with national inflation levels so that you are not losing money over time. If the policy states it will pay out a set fee at the time of your death, if that amount stays the same over, say twenty years, it will not be worth as much to your beneficiaries as when the policy started.