What is Life Insurance?

Life Insurance can sometimes be referred to as Life Assurance and is a contract between the policy owner and the insurer, The policy will state that the insurer will agree to pay a sum of money out in the occurrence of the insured individual’s death or other stated event such as terminal/critical illness, In return the policy owner will agree to pay a specific amount known as premiums at regular intervals or in lump sums, These are legal contracts and the details will need to be read carefully as the contract will describe limitations, Specific limitations are often written into the contracts to limit the liability to the insurer, A common limitation is that an insurer will not pay out in the case of suicide, fraud or war.

Why do I need Life Insurance?

No one likes to think about death, Especially your own, However you need to consider your loved ones, family or business partner/s, Coming to terms with losing someone is never easy and can be a financial burden can make the coping a lot harder, Life Insurance can help support your family or business partner/s after you die, As well as Funeral expenses you can take out insurance that can include: Mortgage repayments, Replacing the primary earner’s salary, Replacing childcare expenses, Education expense,

There are several types of Life Insurance that can be suited to your personal circumstances, It is important to search which one is best for you and in getting the best quote,

History of Life Insurance

Insurance has dated back to 5000BC in China and began as a way of reducing the risk of traders, However Life Insurance only dates back to ancient Rome where Burial Clubs covered the cost of the members funeral costs, The modern Life Insurance that we know today started in the 17th century in England, Originally as insurance for traders, merchants, and ship owners who met at Lloyd’s Coffee House to discuss deals, The first sale of Life Insurance in the United States began in the late 1760’s, Many Insurance companies in the United States started out as a way of insuring the lives of slaves for their owners.

Types of Life Insurance include

Level term insurance - Designed to pay out a sum of money if the policy holder should die during the policy’s term.

Decreasing term insurance - This is where the sum decreases during the policy, often used to protect capital and interest repayments on a mortgage,

Renewable term insurance - When the policy expires there is an option to continue without a health review,

Convertible term insurance - Level term insurance with the option to revert to whole life or endowment insurance,

Increasing term insurance - With inflation each year the value of money declines so this form of insurance escalates the sum assured,