Life Insurance – Taking The Slack
Anyone who tuned in to Channel 4ís Daredevil series will have watched heart in mouth as Dean Potter introduced Britain to the ìsport” of slackrope walking. Slackrope walking is similar to tightrope walking except thereís no pole for balance and if youíre Dean Potter, no safety rope either.
Dean proceeded to make a record-breaking slackrope walk across as 3000 foot high chasm in Yosemite National Park. He described it as a spiritual and cathartic act but most people would describe it as plain crazy.
Life insurers would agree and would see him as uninsurable as they wouldnít want to take the risk of a professional daredevil.
Dean is unmarried and without children and therefore much less likely to be in the market for a life insurance policy even if anyone would have him.
But for the rest of us ñ and anyone with major debts such as a mortgage ñ life insurance is important. Basically itís a promise between you and an insurer – for a monthly premium your insurer will agree to pay out a certain sum in the event of your death.
This money would allow your dependents to replace the income which is lost by your death or in some cases to pay any debts you may leave behind.
Life insurance can also be used by as a way of charitable giving. If you are without dependents some policies allow you to specify a charity to which a sum would be paid.
Pick a policy
There are different types of life insurance policy designed to suit different circumstances but the most common products are Level Term Insurance, Mortgage Protection and Critical Illness Cover.
Level Term Insurance is arguably the most straightforward – it pays out a lump sum should you die within a specified period.
Mortgage Protection policies pay out a sum designed to cover any outstanding mortgage debt. The sum guaranteed will decrease as you reduce your mortgage payments.
Critical Illness Cover protects you against a terminal disease such as cancer and will pay out to allow you to meet any care costs as well as providing dependents with an income.
Tallying your risk
There are numerous cheery websites, such as Death Clock, which will make a prediction about when you are likely to die based on the personal information you provide. Insurance companies do this too but for them the accuracy of their predictions is the difference between whether they are profitable or not.
As a result they will often ask very detailed questions about your familyís health history, your smoking and even drinking habits. As in the case of Dean Potter, some people are so much of a risk that they may struggle to find an insurer while others will have to pay large premiums for a policy. Soldiers fighting in Iraq and Afghanistan often find it difficult to get life insurance.
Life insurance is a peace of mind product. Once youíve taken it out you know that your loved ones will receive some level of compensation should the worst happen. Itís important to understand the product you are signing up to and to pick one that you know will meet your needs.
Compare life insurance.