Getting Life Insurance In The UK

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Life insurance is a long term contract between you the insured, also referred to as the policy holder and the insurance company, whereby, upon your demise, and/or critical illness the insurer will agree to pay your beneficiary a specified sum of money. More times than not the beneficiary is a family member. Some policies may include funeral or burial benefits as well. What this all boils down to is that in the event of your death you can feel some security in knowing that your family or other nearest and dearest will be provided for financially.

The fee for life insurance in the UK, or the premium, is usually paid in monthly or quarterly installments and is based upon the health and age of the insured at the time the policy is effected. It should be noted that to obtain life insurance in the UK usually requires a medical examination to determine the exact amount of the premium to be paid.

Life insurance policies in the UK fall into two main categories – Protection Policy and Investment Policy.

The protection policy will return a lump sum payment in the event of a death or other prescribed event outlined in the policy. This type of insurance is often referred to as Term Insurance. Term insurance is a policy with a set duration limit on the coverage period. Life insurance is also sometimes known as term insurance, because it covers you for a set term – usually up to around 20 years – you can set the term at what you estimate to be the number of years until your children should be financially independent. Nothing is paid out if you do not die during the 'term' of the insurance coverage. Term life insurance policies do not tend to have cash-in values, and provide peace of mind that should something fatal happen to the insured, his or her dependents will benefit by way of a cash payment.

Once the policy is expired, the policy owner will have to decide whether to renew the term life insurance or to let the coverage end. It is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage end. Usually it is possible to convert this type of policy to permanent life insurance.

The purpose of the investment policy is to grow capital by investing premiums that will generate future income based on the financial performance of the insurer. Investment type insurance provides a pay out both if you survive the term of the policy or if you don't. It is a much more expensive than term life insurance in the UK which is a protection only type of insurance policy. Just as with the protection policy, the premiums are paid in a predetermined fashion. This type of policy involves a long-term financial commitment.