Mel Cook Insurance.

Life Home Vehicle Farm

Life Insurance

A payment (generally a lump sum) paid upon the death or Terminal Illness of the life insured.

Types of life insurance:

Term life:

In recent times this is the most common form of cover used. Promises to pay a benefit only if the life insured dies during the term of the policy. The policy accrues no value during its term, the premium is purely paying for the risk factor, plus sometimes a policy fee will be incurred. Most companies provide for a benefit to be paid as a lump sum; however some policies provide for regular benefit payments for an agreed period beyond the death of the life insured.

Best suited to:

Family protection. Repay the mortgage and financial security for the family.

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Whole of Life:

Sometimes referred to as permanent Life. Typically provides a level death benefit through to age 95 at a fixed premium. Policies generally attract bonuses, which are issued as additional life cover. A savings component is built in to a Whole of Life policy which accrues value over time and payable to the policy owner. The emphasis on a Whole of Life policy is permanent life insurance cover with a premium that isn't adjusted annually because of the insured's age. Most Whole of Life policies can be converted to Endowment.

Best suited to:

Unfortunately not available from any New Zealand insurance companies any longer, although there are many existing contracts in-force.

 

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Endowment:

Very similar to a Whole of Life policy but instead of an ‘open ended' term to age 95, an Endowment policy has a fixed term, determined by the policy owner at the time the policy starts, or at the time a policy is converted from a Whole of Life policy. The emphasis of an Endowment policy is life cover for a set agreed period which when the period expires, pays a lump sum of the sum insured plus any bonuses accrued.

Best suited to:

Unfortunately not available from any New Zealand insurance companies any longer, although there are many existing contracts in-force.

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Mortgage Repayment Insurance (MRI)

A form of Term Insurance which is based upon the obligations of a mortgage in the name of the life insured. Usually provides for payment upon death of the life insured to the mortgage provider to repay in full the outstanding loan amount. Some policies will have the life cover decreasing each year in line with the reduction of the mortgage. These policies can also provide protection in the event of a major medial crisis or trauma, temporary disability and provide cover if the insured is made redundant from their job.

Best suited to:

Someone who wants to cover only their risk created by their mortgage

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