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<strong>12</strong> ADVICE<br />
What is Life Insurance?<br />
New to buying life insurance? Learn how it works and what you need to understand to choose your coverage.<br />
A<br />
life insurance policy is a contract with an insurance company. In exchange<br />
for your premium payments, the insurance company provides a lump-sum<br />
payment, known as a death benefit, to beneficiaries upon the insured’s death.<br />
Typically, life insurance is chosen based on the needs and requirements of the<br />
applicants. Term life insurance generally provides protection for a set period of time.<br />
There are many types of life insurance. Some of the more common types are<br />
discussed below.<br />
Term life insurance<br />
Term life insurance is designed to provide financial protection for a specific<br />
period of time, such as 10 or 20 years. With traditional term insurance, the premium<br />
payment amount stays the same for the coverage period you select. The amount<br />
of cover remains the same throughout the term of the policy. The cover amount is<br />
usually paid in a lump sum in the event of a claim.<br />
Decreasing term life insurance<br />
Decreasing term insurance is often bought to clear a specific debt (normally a<br />
repayment mortgage) that is itself reducing over time, with the policy paying out in<br />
the event of the death of the borrower or his or her partner. The policy is designed to<br />
clear the mortgage debt in full.<br />
The term is usually selected to align with the associated debt.<br />
Clearing the mortgage after death is a priority, of course. Indeed, many mortgage<br />
lenders will insist life insurance is in place.<br />
The pay-out will mean the family can remain in the property, and the burden of<br />
meeting the monthly mortgage repayments will be removed (note that decreasing term<br />
insurance is not appropriate for someone with an interest-only mortgage, where the<br />
capital debt is only repayed at the end of the mortgage term).<br />
Determining coverage amount and<br />
duration by life event<br />
Major events in your life can be good opportunities to make your initial life<br />
insurance purchase or review your current coverage.<br />
Use the table below to help determine your coverage amount<br />
and coverage period according to the milestones you have reached<br />
or that you will in the near future.<br />
It is also recommended that you review your life insurance every<br />
5 years during the routine update of your overall financial review.<br />
Blestium Financial Services will guide and advise you of the most<br />
suitable plan that best meets your needs and preferences. We will not<br />
charge you a fee for our services.<br />
Martin Newell,<br />
Blestium Financial<br />
mortgages, life insurance and finance specialists<br />
Whole life insurance<br />
Whole life insurance is a type of permanent life insurance designed to provide<br />
lifetime coverage. Because of the lifetime coverage period, whole life usually has<br />
higher premium payments than term or decreasing life.<br />
How much cover will I need?<br />
Once you have decided on the type of life insurance you prefer, the next step is to<br />
think about your own life insurance needs.<br />
Choosing cover amount<br />
In addition to your coverage period, the coverage amount is another important<br />
consideration. The coverage amount is how much will be paid to your beneficiaries.<br />
Your coverage amount will depend on the need you are trying to meet, but these are<br />
some general factors to consider:<br />
• Your potential income<br />
• Your assets<br />
• Your liabilities (such as a mortgage)<br />
• Any existing insurance (individually owned or through work)<br />
• Other costs your family is expected to face<br />
4 Re Mortgage<br />
4 Overseas Mortgages<br />
4 Buy To Let Mortgage<br />
4 Let To Buy<br />
4 Help To Buy<br />
Top Floor, The Market Tavern, 26 Agincourt Square, Monmouth NP25 3BT<br />
E: blestium@hotmail.com<br />
Tel: 01600 775393<br />
4 Equity Release<br />
4 Protection<br />
4 Asset Finance<br />
4 No broker fees<br />
Professional Impartial Confidential<br />
www.blestium.com<br />
Consider life insurance when you: Consider an amount that covers Consider a coverage period equal to<br />
Get married Student loans or other debts, income, and home expenses Any duration<br />
Buy or improve a home Mortgage and/or home equity loan The term of your loan/mortgage<br />
Have a family to support Family income needs and new debts The time when you expect you will no longer have<br />
dependents<br />
Start a business Expected revenue, debts and future expenses, Lifetime or the length of time you anticipate<br />
and maintenance of the general business structure<br />
owning the business<br />
Plan a child’s further education Future college or university expenses The anticipated graduation date of the child<br />
Estate Planning Funeral and estate expenses, including estate tax, wealth transfer Your lifetime
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