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There are some products and services out there which consumers delight in browsing and buying, looking for the most complimentary deals and exploring the multitude of discounts until they find something in line with their requirements and their budgets. While insurance is never something that consumers delight in having to pay out for, there are few policies and concepts which are more sobering than the idea of taking out life insurance – essentially a policy which provides financial support to your loved ones and to your next of kin should you die either expectedly or unexpectedly.
For many consumers, taking out life insurance requires a balance – on the one hand, the idea of purchasing life insurance is depressing (with some consumers even viewing it s bad luck or like tempting fate), and so they spend as little time as possible investigating the various areas of focus and policies that they can benefit from. On the other hand, life insurance can be a much more complex investment depending on the individual and their financial situation, and so it is something that should be explored fully if the consumer hopes to be able to actually provide some kind of support for their family post-mortem.
Looking back over the history of life insurance, comparing the earliest examples with the written up policies and contracts which control our deathbed finances today, it seems as though the provision of support for loved ones has long been a focus point of society and communities – with the earliest examples including the ‘burial clubs’ set up in Ancient Rome whereby funeral expenses were covered and financial assistance was provided to surviving family members of members who participated in the club.
While this early example was very much a community led initiative, the first company which actually offered a form of life insurance was the Amicable Society for a Perpetual Assurance Office – a London based company which was founded in 1706 and which required an annual payment from members which would then be culminated with all the other payments and divided between the families of those who had deceased during that year.
For this earliest example of a life insurance commitment, the ages for consideration of membership lay between 12 and 55 – providing huge insight into how young people were dying back in the 18th century when compared with the extend of old age which is commonly reached today.
From there, life insurance became something which was underpinned by mathematics and statistics, with the 1750’s being the decade when these kinds of tools were used to determine risk and the likelihood of date in relation to age and lifestyle. As time went on, policies became fairer to the consumers and started to take into account the balance required between what was paid in and what would subsequently be paid out on death, leading to the development of the modern life insurance structure which works as follows:
A consumer who chooses to take out life insurance can select a policy which is based on the amount that they would want the provider to pay out in the event that they (the consumer) dies. Using this information, the provider then sets a payable premium which is most often paid monthly by modern consumers. As long as the premium is paid on time at the agreed intervals, from day one until the end of the cover, the provider will indeed pay out the agreed amount upon the death of the named consumer on the policy. The higher the required payment from the provider, the higher the regular premium payments will be.
Under this structure, there are two main types of life insurance which can be purchased by the consumer, with the choice between the two largely dependent on the age of the consumer and their lifestyle.
For those consumers questioning under what scenario you might select a term life insurance policy and opt not to renew it, this is the kind of policy which could coincide with the end of a mortgage payment, or with the start of retirement – after which time the family of the deceased will receive regular payments from their pension fund and so will not need a life insurance pay out.
This all begs the question, when and why might a consumer decide it is time to take out life insurance and start exploring their policy options?
There are a wide range of different scenarios under which a consumer may decide it is time to take out life insurance, all sitting under the main umbrella of support and ensuring that the family are supported in the event of an untimely or unexpected death.
One of the main instances under which life insurance is a popular idea is when a consumer takes out a mortgage – a long term investment into owning their own property which is supported with regular monthly payments under a specific plan. Once a mortgage is in place, the death of the consumer could leave the full mortgage payments to just their partner, under which event they will want that surviving partner to be financially supported in making those payments. Similarly, if a consumer is the main breadwinner and is the one who earns the money needed by a family to survive and pay the bills, they may decide to take out a life insurance policy which will leave their family supported in the event of their death.
Other circumstances which may lead a consumer to take out life insurance include:
There are also a wide variety of stipulations under which life insurance may not be valid. For example, despite the fact that regular agreed payments should mean that the provider is contractually obliged to pay out the lump sum upon death, if a consumer was to die a mere few weeks or months after taking out the policy, the provider is likely to throw loopholes and obstacles in the way of payment, refusing to pay out without further investigation into the death. For those consumers who are well attuned to murder mystery fictional programmes and documentaries, the concept of taking out a hefty life insurance policy before committing a murder is not unheard of – with providers raising huge suspicions if a consumer was to die very suddenly and unexpectedly soon after a large policy was taken out against them.
Another instance under which life insurance will likely not pay out is in the event of suicide – with various providers offering different terms and conditions depending on how long the policy has been in place before the event of the death. However, for the most part it is assumed that purposeful death will not pay out a large sum of money to surviving relatives.
Before a consumer looks to take out a life insurance policy, they should first consider any other areas of their lifestyle or working life which may provide cover and support to families in the event of their death. For example, if the consumer is young and doesn’t yet have a house of their own or children, they don’t need to spend their money on a life insurance policy which doesn’t do anything or protect anything specific. Likewise, if a consumer is of retirement age and is receiving a pension, they can rest assured that their pension will cover the support needed for spouses and children, and so a life insurance pay out is not necessary – nor is it a necessary investment on their part.
Some work places also offer support to loved ones in the event of an employee’s death, for example large global organisations like Microsoft and Google which commit to paying a percentage of the salary of a deceased employee to any spouses or children for an agreed period of time. Under this kind of benefit, life insurance is again not a necessary investment for the consumer as they already have the assurance that their family will be covered through the support of their employer.
For those consumers who do need to take out a life insurance policy, there are a wide range of retailers offering all manner of different packages and policies, including their own distinct terms and conditions, and each including different circumstances under their policy deals.
Some of the biggest retail names in the life insurance industry include:
All of these retailers use mainstream media as well as targeted advertising to showcase and share their deals and offers, though consumers should take not to invest in a policy that will not serve a meaningful purpose in their life and according to their own requirements.
The main thing to note about life insurance is that the more you are prepared to pay in premiums and regular payments, the higher the pay-out will be in the event of your death. Life insurance is not a compulsory purchase or a legal requirement – in fact, in most cases it is a luxury that only those with something of high value to hand over will invest in. Life insurance should not be confused with compensation in the event of an accidental death or even murder, nor should it be confused or mixed up with a consumer’s will which is where they detail their own funds and possessions and what they want done to them in the event of death. Life insurance is purely a policy which can support surviving relatives who are left with a mortgages or hefty bill payments without payment support from the sole breadwinner – thus life insurance is not as crucial as many consumers are led to believe.
One of the major trends which is taking hold of the life insurance industry is the effect of credit reports and the way that credit reports are being used by providers to determine just how viable a consumer is as a potential customer. Credit reports are designed to show how reliable a consumer is at repaying debt and keeping on track of their finances – and thus can help present a financial image of a consumer to the insurance provider in terms of how likely they are to die and leave high bills and outstanding debts to their family members.
Another trend in the life insurance industry is the continued use of online and ecommerce companies which put the consumers directly in touch with the providers and cut out the middle man and the agents – reducing the need for agency fees from those companies which promise to manage the life insurance policies for their clients, and instead letting those clients tailor and keep on top of their own policies and payments. This is made easier by the rise in insurance comparison sites which put the control into the hands of the consumer, and which invite consumers to compare different deals depending on factors such as their age and lifestyle.
When it comes to purchasing and sourcing the best life insurance policy, consumers need to be aware not only of the premiums they are required to pay, but any terms and conditions which could render their policy null and void in the event of death. This comes through research and the support of online forums and communities, where consumers can find the best deals and the best terms in line with the kind of support they are looking to provide.
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