A Way To Save On Life Insurance

Prepayment of life premiums has appeal now that a growing number of companies are giving a yearly discount. One top company, for example, will give a 4 'A% discount for premium prepayments from one to 10 years, and 4% for the next 10 years. Thus, you would pay only 95.5% of the first year's premium; 80.2% at five years; 64.4% at 10.

The rate paid on dividends left to accumulate interest has gone up with many major companies.

On the juvenile life insurance front, a new policy quintuples coverage on the youngster's life by age 21, while premium doubles. The plan jumps the coverage of a basic £5,000 policy to £12,000 at age 16 - with no change in premium - and jumps again to £25,000 at age 21, when premium is doubled. "Jumping juvenile" plans of this type are worth discuss ating with your insurance man. Speaking of insurance for kids, the idea of building a child's own program for him when he is still quite young has some merit. Straight life costs about £8 a year per £1,000 at age 5, around £9 at age 10, and £10 at age 15 assuming at least £10,000 in coverage. This jumps to £16 at age 30 when your child, maybe as a young parent, might need to buy.

You can get some added values by attaching options to a child's life policy. As a simple example, say that you buy a £10,000 policy for a boy aged 10 for £90 a year. Adding an option charge of £9 a year will give the boy the right to buy more coverage, in £10,000 amounts, at option dates in the future, regardless of his state of health. Under a typical plan, his potential coverage is £70,000.

Raising cash on your insurance

Life-line borrowing - or cashing in on an old contract clause that the insurance company would as soon forget has become a popular money-raisers' sport. With good reason, too. One of your best bets for low-interest borrowing is life insurance. That is, if you haven't already used up this line of credit and don't mind upsetting your family insurance plan.

The rate is typically 5% simple interest. For example, say that you bought a £50,000 policy at age 35; today at age 50 - you have about £12,500 in cash value. You can usually borrow from the insurance company up to 95% of this amount, and later pay back the principal - or not, as you choose. If you don't repay, but continue to pay your regular premiums, your family's protection is only cut by the amount of the loan (25% in the example). If your life policy is one that pays dividends, usually you are able to play safe and use the coming year's dividend to buy one year of term insurance to cover you up to the amount of the loan. With some insurers, this can be done without any further physical examination.

And note this point: The borrowing isn't in question if your contract says you can do it. It isn't optional with your insurance company. You have a contractual right - signed, sealed, delivered. Most policies written in the past 25 years have the 5% clause, though 6% appears on many recent policies. You can hardly expect the companies to be rushing to your door with loan papers. And a change won't erase the 5% clause in your old policy. Remember: If you're middle-aged, with each £1,000 of life coverage owned 15 years, you have about £250 in current cash value - and you can borrow that much at a sweet 5%. That's the point to sing about in this day of the 12% bank loan.


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Life Coverage For The High-risk Man

What you buy is one thing. Whether you can buy at all is another. Usually you can buy. If you were turned down for life insurance in the past as a health or occupational risk, you may well find that you can now get a policy. Many top companies have been easing their rules and going in heavily for what the trade calls substandard business. You pay an extra premium, and sometimes it's high. But often it will be just a couple of pounds more per £1,000 of protection.

Even a man who has had cancer can get a life insurance policy so long as he has had no recurrence of the disease in five years or more. The added premium he'll have to pay is about £15 per thousand a year. Thus, a... see: Life Coverage For The High-risk Man