Home / - Reviewable Premium vs. Guaranteed Premiums
A wide range of life, critical illness and income replacement insurance plans can now be set up on the basis that the premiums are either guaranteed for the term of the plan, or periodically reviewable during the plan term.
Guaranteed premiums are almost always more expensive than reviewable plans initially as the guarantee has to be paid for at outset by the plan holder.
Premium terms are confirmed on the client specific illustrations.
If the premium is guaranteed this means that it will not change during the term of the cover. If the premium is reviewable this means that it is likely to change.
How and when insurers review premiums differs by provider. Make sure the documentation is read carefully before committing to any plan. Factors that may change and lead to a change in the amount the policyholder pays are:
• the future level of claims the insurer pays
• the amounts of money the insurer will pay to reinsurance companies with whom they share the costs of claims
• the number of plan owners who give up their plans early
• the insurer’s expenses
• inflation
• investment returns
• taxes and
• the amount of money the insurer needs to hold as financial reserves.
Pros and Cons
Reviewable premiums should allow you to buy more cover now for the same premium.
The downside is that the cover might become much more expensive in the later years, particularly if the claims paid out to other policyholders are higher than the life office anticipates. This risk of higher claim costs is significant as medical science pushes new diagnostic techniques forward with accelerates claims.
Guaranteed premiums provides the absolute certainty that if you can afford the premiums now then they won’t change for the entire term of the plan.
12 October 2007 13:57:19
Women considering critical illness cover or life insurance have been advised on how to reduce their risk of ovarian cancer.
A new study has highlighted that post-menopausal women who eat a low fat diet could reduce their risk of developing the disease.
According to the Journal of the National Cancer Institute, the lowest risk was found in those who had the highest fat intake before the trial began.
Scientists from the Fred Hutchinson cancer Research Centre in Seattle investigated the contrasting effects of normal and low fat diets, with 30,000 women following their normal diet and 20,000 taking on an alternative routine.
The latter cut their fat intake to a fifth of their overall diet, consumed at least five servings of fruits and vegetables every day and also incorporated six servings of whole grains into their daily intake.
Although the risk of ovarian cancer was similar in the two groups four years later, it was smaller in the dieting group in the following four years.
"Ongoing follow-up of trial participants may provide additional valuable assessment of the effects of a low fat dietary pattern on these and other cancer incidence rates," the study's authors concluded.
Direct Life and Pensions Services Ltd are one of the UK's leading providers of life insurance, term life assurance, mortgage protection, critical illness and life insurance advice
09 October 2007 14:28:03
More people are opting for term instead of whole life insurance, according to a group of independent financial advisors.
Life Direct pointed out that whole life insurance promises to pay a certain amount when an individual dies, so long as that person has kept paying the premiums, whereas term insurance will pay out a lump sum if someone dies within the "term" or period of the insurance.
Term insurance has been highlighted by experts as the cheapest type of life policy, giving the biggest amount of cover for a given monthly premium.
"Life insurance costs more the longer the term you take it out over," commented Steve Wroe from Life Direct.
"So if you do a one year term, it's going to be cheaper than a twenty year 20-year term policy, which is going to be cheaper than a forty year 40-year term policy. Of course the longest term you can take a policy over is a whole of life, so they do tend to be a little bit more expensive anyway," he continued.
Mr Wroe emphasised that life insurance is about "peace of mind", and individuals should weigh up the pros and cons of both types of cover depending on their circumstances.
Legal and General recently eliminated the "ongoing duty of disclosure" from its life insurance products, which the company said is "often seen as a burden."
Direct Life and Pensions Services Ltd are one of the UK's leading providers of life insurance, term life assurance, mortgage protection, critical illness and life insurance advice online.
27 July 2007 14:11:42
A lack of established causes for breast cancer incidence makes managing the disease extremely difficult, according to Breast Cancer Care.
However, remaining "breast aware" throughout life and keeping cognizant of the risk factors can help with detection of the disease, and possible eradication.
Dr Emma Penner, nurse consultant for Breast Cancer Care, said that while there's no confirmed "cause and effect" for breast cancer, British women can at the least adapt their lifestyle to minimize the risk of contracting it.
"What women can do is they can remain breast aware throughout their lives," she said, "know what signs to look out for and make sure they report them early because the more soon breast cancer is treated, the more likely it is that there will be an optimistic outcome.
"And finally, for women who are at the right age – which in this country is 50 years and above – to make sure they attend screening tests when they're invited.
"We can offer some very tentative lifestyle advice in that……we recommend that women try and keep their weight within normal limits, take moderate exercise and a moderate alcohol intake, because we know all of those things are also risk factors from breast cancer."
She added: "We never give the message that if you do these things you'll never get breast cancer, but we can give lifestyle and health advice to try and help people keep their risk as low as possible."
