Life Insurance Continued

What influences cost?

You'll pay more the older you are and the poorer your health. Women usually pay less than men of the same age because they have a greater life expectancy.

Points to note

- If what you need is just protection for your dependants, take out term insurance - for example, an increasing family income benefit policy. Don't take out investment-type insurance - it's expensive.

- If you've suffered from some serious illness - had a heart by-pass operation, for example - finding life insurance may be difficult. Try going to a broker.

- If you don't smoke, consider companies which give a special discount to non-smokers - but always check that another insurer isn't offering cheaper rates regardless of whether or not you smoke.

- The emergence of AIDS has made some insurance companies increase their premiums (some just for men of a particular age group, others for men of any age, others for single men of specified age groups and still others for both sexes). Some policies allow >How much to insure for

This will vary enormously depending on your particular circumstances. Work out what your dependants' needs would be - mortgage, regular bills, household spending, running a car, replacing the car if yours is a company one, and so on. Deduct any help they'd get from the state and any savings due to, say, the fact that you are no longer commuting. Are you in an insurance scheme through your job? Many employers run such schemes, often as part of the pension scheme. If there's a shortfall between the spending needs you've calculated and the income that would come in, you need to take out life insurance.

If you have children and they're being looked after by your partner, you'll probably need insurance on your partner's life too to cover the cost of, say, a nanny or a nursery place. You might want to cover the cost of help round the house too - a cleaning lady, gardener, even a cook.

You'll have to decide whether to choose a lump sum or an FIB policy. FIB policies are generally cheaper, but they're less flexible.

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Life Insurance

What it covers

Term - or 'protection-only' This type of insurance pays out if you die within a set period of time - the 'term'. If you survive the term it pays out nothing. It can be arranged on the lives of two people - for example, a married couple - to pay out when one or both of you has died.

Investment-type insurance - such as endowment and whole life policies - accumulates a surrender value which may be paid out on death, when the policy matures or when it is cashed in. Though these policies include a protection element, their main use is for investment purposes and they... see: Life Insurance

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