‘Life insurance’ is a catch all phrase often used to refer to long term insurance products.
Long term insurance generally refers to insurance products that protect your family in the event of your death or in the event that you are unable to work.
As far as insurance goes, life cover is pretty straightforward:
if you die (for any reason), the cover amount (or sum assured) is paid out to whomever you choose (your beneficiaries).
More on this here.
Other life events or “Risks” are insurable too. The inability to work, disability, critical illness are risks often bundled together with Life Insurance.
In the event that you are unable to earn a income, what happens?
Well here, products like, Salary Protection, Disability and Critical illness Cover come into play.
Tough questions to ask yourself. What you need and why is the place to start.Determine your needs
A little more about insurance:
Insurance is simply the transfer of the risk. You transfer your “risk” to an insurer and pay a premium in order to do so. Simple.
So what about underwriting?:
Underwriting is the term used by life insurers to describe the process of assessing risk. We ask a range of medical and lifestyle questions to determine an individual risk profile. This allows us to provide a price based on your individual risk profile.
When taking out a policy the insurer needs to assess their risk. They do this by asking you questions or “disclosures”.
The main cause of claims being rejected is because of non-disclosure or “omitting the truth”. Being truthful when applying for life insurance is important as the same questions will be assessed at claim stage prior to claims being paid.