The general rule of thumb for life insurance is that you need it if someone you care about will be hurt financially if you die.
Sometimes, though, finding life insurance that will cover you and your specific circumstances is easier said than done; ask any deep-sea diver or firefighter.
There are multiple different types of life insurance, and we’re going to break down five of them today.
While you might not spend your working day trying to keep your air hose away from squid or charging into burning buildings in between dealing with traffic accidents, there are a surprising number of jobs considered high-risk in the UK, from aerial riggers and farmers to paramedics and welders.
The factors affecting a high risk occupation life insurance policy will include things like your job, your experience and expertise in that job, and details of previous accidents and incidents related to the job as well as your risk exposure on the job.
Dangerous hobbies like cave diving can also pop you into this category; high risk insurance looks at every part of your life, and your broker will ask a lot of questions.
Some questions may feel intrusive, but it’s all part of finding the right coverage for you; questions about smoking, weight and alcohol intake are part of most life insurance applications.
Your beneficiary will get a lump sum payout unless you’ve put it into a trust; your broker will discuss these options with you.
Sticking with the workplace, group life insurance is often a perk in the UK. It offers flexibility since you can set up the beneficiary to be anyone, even a charity. You can also change the beneficiary unless they have an irrevocable designation.
A group life insurance policy offers a payout as long as the premiums have been paid, and you don’t have to physically pop your clogs at the office for this to take effect. The criteria are that you are actively employed and a member of the scheme at the time.
UK companies offer this as a way to show caring for their employees. The fact that it’s a tax-free benefit to the company also makes financial sense.
You can wrestle that squid knowing that the company has your back.
If you’ve climbed the corporate ladder or own your own business and put the days of in-person squid wrestling behind you, one of the perks is being able to take out life insurance through the company.
This is not the same as a group policy. While company director life insurance premiums are often covered by the company, and it’s potentially more tax effective, this type of insurance – also known as relevant life insurance or life cover – is usually written in trust.
A cash benefit is paid to the director’s beneficiaries.
Your broker will discuss your requirements and advise you accordingly: as long as your company is structured to pay for the cover, you should be eligible.
But what happens if you get sick?
Death, like taxes, is unavoidable. One of the nasty things about life, however, is that sometimes it gives you a good kicking while you’re still around to receive it.
Critical illness cover will provide you with a safety net if you are unable to work due to severe illness. While being sick is never a fun time, it frees you up to concentrate on your health and family instead of frantically worrying about paying the bills.
You’ll need to discuss things like renewable versus guaranteed premiums with your broker, and you’ll have to answer a number of questions about your current health conditions.
Keep in mind that critical illness cover is for a narrow selection of conditions. Don’t be afraid to ask your broker to get specific.
If you’ve never had life insurance, and you’re starting to feel like you need it as you eye the years after your first half century, there’s both good news and bad news.
The bad news is that insurance companies charge more as you get older. The good news is there are still options for you.
While 50 isn’t old unless you’re a toddler (or an insurance broker), the reason for the change is simple: when you take out life insurance, you are betting that you’re going to die. The insurance company is betting that it won’t be in the near future, so premiums tend to be cheaper when you’re younger.
This may change as actuarial tables catch up to an ageing population, but right now you have some advantages.
A 50 plus life insurance policy will often offer a guaranteed acceptance, with no medical required and no health-related questions. In this case the sooner you get one the better, with hopefully a very long life still ahead of you. While these policies have no cash-in value and tend to offer a lower lump sum payment, you can still leave enough for your beneficiaries to cover funeral expenses and have a bit left over.
You can take out one of these until you reach the age of 80, so it’s something worth thinking about.