What type of insurance do you need? Useful info.

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This question is one posed by many members of the Armed Forces. Put very simply, Life Insurance benefits others, whilst Personal Accident and Critical Illness Insurance are there to protect and support you.

So what does this mean to you? Well if other people depend on your income (your wife, husband and children for example), a Life Insurance policy will provide for them in the event of your death. If you do not have dependents I suggest Life Insurance is not required, unless you wish someone else to benefit from your death.

However, whether you have dependants or not you should consider protecting yourself against a life changing event that may have a potentially detrimental affect on your circumstances – this is where Personal Accident Insurance and Critical Illness Insurance comes in. Personal Accident policies compensate you for accidental bodily injuries that result in permanent injury or disablement - for example a total loss of sight or a limb. Critical Illness cover on the other hand provides a lump sum if you are diagnosed with a specified critical or terminal illness.

Life and Critical Illness policies are taken out for a defined term – for example 25 years – and the insurer guarantees cover for the risk, for an agreed monthly premium. This cover and premium can be consistent throughout the term of the policy, or can be arranged to increase annually in line with inflation. Alternatively there is the option to take a lower cost fixed premium, which gives reducing cover over the term. The premiums charged are rated according to the circumstances of the individual covered.

Personal Accident Insurance is a renewable policy whereby the Insurer neither guarantees the prices or the cover beyond the contracted term, which may be a year or a month. The majority of Personal Accident polices include an accidental death benefit, and often provide optional Life Insurance, which again are renewable and therefore the premium and cover are not guaranteed beyond the renewal term. These premiums are not dependant upon individual’s circumstances, instead there are usually a number of different levels at different price points to choose from, and these prices are the same for everyone.

Every protection product from insurance providers differs in the cover offered and, more often than not, the price paid, just as your own insurance requirements are unique to you and your circumstances. These variables really preclude any more detailed comparisons on the differences and benefits between these insurance products, which is why it so very important to always take advice from appropriately qualified specialist military advisors. You can find a full list of insurers qualified to help you at Services Insurance and Investment Advisory Panel.

Thanks to Forces Financial for this information.
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