Low Cost Term Life Insurance

Low Cost Term Life Insurance

Just like buying a new car or getting the best flat, getting low cost term life insurance is the result of intensive research and comparison. In the United Kingdom, many people have already seen companies selling their insurance policies through the various supermarkets.

In 2005, it was reported that these insurance policies were actually not the most convenient choice because they had higher monthly premiums than other companies. It was also found out that only one company held the monopoly over the supermarkets. There was no consumer choice.

The importance of professional advice

Low cost term life insurance won’t fall out of the skies. You need someone who already knows the ropes, the financial advisor. Talking to an independent advisor or an agent would give you insight to the various clauses that people normally miss when they acquire insurance policies.

Low cost usually means non-whole life insurance. If you want something that would safeguard your family for only a short while, you might be interested in term insurance. Term insurance that’s really light on the pocket usually covers only a ten-year period. After the ten-year period, the term insurance becomes invalid.

Escaping taxes

There’s a way to avoid taxes without getting your wrists slapped with cold, metal cuffs. For low cost term life insurance, this tax escape is called the family income plan. Here’s how it works: the inheritance tax in the United Kingdom taxes large sums of money passed down from to dependents (because the money becomes part of a person’s estate).

To avoid the hefty tax, the life company might choose to give monthly remuneration instead of a lump sum. The dependents would be given the money monthly, until the total amount of the lump sum is reached. It might not sound very attractive to many, but it would assure that the 40% to 50% inheritance tax can be avoided.

The catch

Here’s the catch if you want a family income plan. Say you already know that you might die within less than 10 years. You die at year 7. The insurance plan would cover the point of death to the 10th year. After the 10th year, the payments would stop, because that’s the end of the term already. It might sound lousy, but nonetheless, it’s what life insurance can offer.

If you think this type of insurance would not satisfy your worries for your family’s future, perhaps it would be better to invest in a more expensive insurance plan with extended period coverage.