Probably the largest investment you will ever make is when you buy a property and normally its purchase is financed using a loan called a mortgage. Most providers of this type of loan will insist that you take out mortgage life insurance for the duration of the loan. This will ensure that the mortgage amount is paid in full should anything happen to you, like long-term sickness or death. It is possible to have a mortgage without life insurance but should you die, who will take over the monthly mortgage payment.
To avoid leaving your loved ones with the responsibility of finding the money to pay the mortgage it could be considered prudent to take out mortgage life insurance. The most basic form of life insurance suitable for protecting a mortgage is called Decreasing Term Life Insurance. It pays a lump sum should you die during the period of the term (the policy's lifespan). The value of this lump sum reduces by set instalments, reaching zero value by the end of the policy, reflecting the decreasing value of the mortgage.
How much cover you need when purchasing a mortgage life insurance policy rather depends on your budget and what you wish to provide for financially in the event of your death. Generally, the most basic level of cover is calculated by using the mortgage amount less the collective value of any existing life insurance policies. This should just pay off the mortgage and leave a roof over the heads of your loved ones, which you may consider proves adequate for your needs.
Invariably, when looking for insurance, we opt for the lowest premiums available for the cover we require. Therefore, it pays to compare a number of insurance companies because the cost of the same policy could differ with each provider. A number of factors that determine the size of the premiums, For example, the sum to be insured, the period of insurance cover, your sex, age, occupation and whether you smoke, are. Smokers are deemed to be more of a risk to insure, so an alteration in you lifestyle, such as becoming a non-smoker, could help reduce the price of your premiums.
You may wonder what would happen if you do not actually die but became too ill to work and could not pay the mortgage, would a mortgage life insurance policy be of any use in that instance? As it stands, the basic level would only cover the event of death to the policyholder and as such, would not cover long-term illness. However, you can remedy this by increasing its level to include one of the additional extras, for example, critical illness cover. This would pay an agreed amount on the diagnosis of the serious illness. Alternatively, the inclusion of a benefit called Waiver of Premium which means that the premiums would continued to be paid in the event illness or an accident. Both could provide you with extra protection but it would increase the cost of the premium.
There is a lot to consider when seeking mortgage life insurance. As you are no longer obliged to use the insurance company specified by the mortgage lender, you now have the freedom to choose which mortgage life insurance provider you buy the policy from also means it is not a simple task. To assist your search, it could prove useful to use a specialist mortgage life insurance broker. They have access to a wide range of insurance companies and are able to explore the market place on your behalf, selecting the best deal on the most appropriate cover.
About the Author:
David Thomson is Chief Executive of BestDealInsurance (http://www.bestdealinsurance.co.uk) an independent specialist broker dedicated to providing their clients with the best deal on their home, motor and life insurance.
Showing posts with label life insurance. Show all posts
Showing posts with label life insurance. Show all posts
Monday, February 18, 2008
Insurers Sting Obese And Smokers
Smokers and the overweight are seeing increased life insurance prices. The insurance industry is penalizing these people with higher costs of cover.
The way insurance companies calculate premiums is to work out the risk to them of the customer dying while the policy is active. When looked at from this point of view, smoking and obesity are obviously very important factors in this consideration.
Some pro-smoking groups assert the point that according to statistics smokers under 40 are as likely to die as non-smokers of the same age group. However, as Sainbury's life insurance manager, David Pickett said: "Health risks associated with smoking can have a big effect on life cover costs. It is vital for those who have kicked the habit to review their policies".
A recent study conducted found that the average smoker paid 56% more than a non-smoker for a life insurance policy. This study was based on nine top UK insurance companies, based on quotes for two men aged 20 asking for £100,000 cover over a 25 year period. The only difference stated on the applications was that one smoked and one didn't.
As well as toughening up on smokers, the overweight have seen increases in their policies. Recently insurance companies have changed their approach to the obese, the Body Mass Index (BMI) that affects insurance has been lowered from the previous figure of 33 to a BMI of 28. This is a reduction of 16%, anyone with a BMI above 28 faces a 50% rise in premium prices.
Life insurance companies will calculate your BMI, if it exceeds the limits deemed acceptable by the company a doctor's report may be requested. If the BMI is very high the company may ask you to have a medical examination, if this exam concludes that the customer's weight is of concern then the policy will be increased by a minimum of 50%, but this can rise to 400% in the case of the morbidly obese.
Life insurance companies do have some tolerance for weight gain, for the middle aged they accept that people naturally put on weight as they age. Age is taken into account alongside weight when insurers take applications.
Obesity is a growing problem in the UK and a serious threat to health, as insurers are making clear, over the last 20 years obesity in UK adults has dramatically risen, with more than 60% men and 50% of women deemed overweight or obese.
So if you're intending to apply for life insurance it would be beneficial to lose a few pounds first if you're currently overweight. It's not quite as simple for smokers, to be seen as a non-smoker by insurance companies you must not have consumed any form of nicotine during the previous 12 months, although some insurance companies extend this period to five years.
Due to the fact that premiums for smokers and the overweight as so high the importance of seeking out a competitive policy rises. The best way to do this is to use a comparison website such as Onlyfinance.com, which means you only need to input your information once and hundreds of policies will be reviewed, and the best price and package will be selected.
Obviously the policies found on a comparison site will still be higher for smokers and the overweight but the best available deal for you will be found. The importance of life insurance is becoming clear to everyone nowadays, it provides peace of mind, if something did happen then your family will not be left in a state of financial confusion. The popularity of policies has also mean the life insurance leads market has remained a busy and profitable one.
About the Author:
Jemma Tipping - http://www.onlyfinance.com
The way insurance companies calculate premiums is to work out the risk to them of the customer dying while the policy is active. When looked at from this point of view, smoking and obesity are obviously very important factors in this consideration.
Some pro-smoking groups assert the point that according to statistics smokers under 40 are as likely to die as non-smokers of the same age group. However, as Sainbury's life insurance manager, David Pickett said: "Health risks associated with smoking can have a big effect on life cover costs. It is vital for those who have kicked the habit to review their policies".
A recent study conducted found that the average smoker paid 56% more than a non-smoker for a life insurance policy. This study was based on nine top UK insurance companies, based on quotes for two men aged 20 asking for £100,000 cover over a 25 year period. The only difference stated on the applications was that one smoked and one didn't.
As well as toughening up on smokers, the overweight have seen increases in their policies. Recently insurance companies have changed their approach to the obese, the Body Mass Index (BMI) that affects insurance has been lowered from the previous figure of 33 to a BMI of 28. This is a reduction of 16%, anyone with a BMI above 28 faces a 50% rise in premium prices.
Life insurance companies will calculate your BMI, if it exceeds the limits deemed acceptable by the company a doctor's report may be requested. If the BMI is very high the company may ask you to have a medical examination, if this exam concludes that the customer's weight is of concern then the policy will be increased by a minimum of 50%, but this can rise to 400% in the case of the morbidly obese.
Life insurance companies do have some tolerance for weight gain, for the middle aged they accept that people naturally put on weight as they age. Age is taken into account alongside weight when insurers take applications.
Obesity is a growing problem in the UK and a serious threat to health, as insurers are making clear, over the last 20 years obesity in UK adults has dramatically risen, with more than 60% men and 50% of women deemed overweight or obese.
So if you're intending to apply for life insurance it would be beneficial to lose a few pounds first if you're currently overweight. It's not quite as simple for smokers, to be seen as a non-smoker by insurance companies you must not have consumed any form of nicotine during the previous 12 months, although some insurance companies extend this period to five years.
Due to the fact that premiums for smokers and the overweight as so high the importance of seeking out a competitive policy rises. The best way to do this is to use a comparison website such as Onlyfinance.com, which means you only need to input your information once and hundreds of policies will be reviewed, and the best price and package will be selected.
Obviously the policies found on a comparison site will still be higher for smokers and the overweight but the best available deal for you will be found. The importance of life insurance is becoming clear to everyone nowadays, it provides peace of mind, if something did happen then your family will not be left in a state of financial confusion. The popularity of policies has also mean the life insurance leads market has remained a busy and profitable one.
About the Author:
Jemma Tipping - http://www.onlyfinance.com
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