The first is pragmatic: brokers and agents have received very small commissions for selling such policies compared with what they have received on the more costly investment-oriented policies.
But of equal importance has been the reluctance of people to put money into life insurance which operates on the same principle as insurance against a car crash or a fire.
In the same way that your house insurance pays out only if you suffer a fire or other damage, the pure protection policy provides no benefits unless "the life assured" - the person whose life is covered by the policy dies (or, in the case of permanent health insurance, becomes ill or unable to work).
When faced with this type of insurance proposition which may require you to pay, say, £2500 over a period of 15 years but will return not a penny if you survive, there is a quite natural inclination to say "It can't happen to me. (http://www.bbc.co.uk/news/uk-england-london-18917932)
" Many people who have bought life insurance have as a result instead purchased policies oriented towards the production of a capital sum over a short period of 10 or 15 years - policies which to produce the large sums they promise must involve the investment of the bulk of the premiums in assets such as shares and property, and which therefore provide very little life insurance cover in relation to the amount of premiums pa.
Though this point will be more fully covered later, it is worth noting here that to provide £200,000 for his dependants if he should die within the next 20 years a 30-year-old man would have to pay only about £220 a year provided he accepts no return at the end of the peri.
If he requires the payment of the £200,000 at the end of the period, he may have to pay over £2300 a year. That is the difference between pure protective life insurance (no death, no money) and investment-oriented life insurance.
These two types of policy clearly have different uses and applications, and the most important decision in life insurance is to buy the right type for your needs.
Broadly speaking, at the younger ages when family responsibilities are heavy (from marriage through to when children become independent) protection is more important, whereas in the later stages of working life investment becomes the priori.
Price comparison sites like http://www.moneysupermarket.com/life-insurance/ are always........ see: click here for Buying The Right Type For You
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