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LIFE INSURANCE - 5 yr term or 30 yr guaranteed term? Please read extra text before answering! Thank you :)?

I've been quoted £15 per month for a 5 year term and £20 per month for a guaranteed term over a period of 25 years. After researching life insurance premiums I've learnt they have reduced by 32% over the last 10 years due to longer life expectancy and new medicines. Do you think this guaranteed term is just another way for companies to get more money out of us by using the "just in case" or "you never know what'll happen" approach or is it worth while? Anyone got a crystal ball?

Public Comments

1. If you don't see the value in the extra 20 years of level premiums for 5 pounds more a month, I don't know what to tell you. There is a real risk at stake and insurance is the most immediate and least expensive way to mitigate that risk. I'm not licensed in the UK, but in the US lower mortality costs AND increased competition have severely driven down costs as you mentioned. Lately reserve requirements have been increased, however, and most folks over here expect prices to start inching back up. No one could say for sure, though.
2. You have the wrong perspective. Let's say that you take out a 5 yr term today. You are in excellent health (today). But in five years, you develop health problems. In the worst case scenario, you cannot afford to pay for the new premiums to keep the existing policy (after the 5th year); it is difficult to afford (or qualify for) a new policy; and you cannot afford (or not allowed) to convert the existing policy to some form of permanent insurance. Buying a longer "term" simply means capturing a longer price cap to your cost of insurance.
3. I assume that the same sum insured in both cases. In effect you are more likely to die in 25 years than 5 - hence the (slightly) higher premium. You must also be fairly young for the increase to be so small. The younger you are when you take out life insurance the cheaper it is and the rate is fixed for the whole of the policy. Rates may come down (but I expect them to rise - increasing mortality based on poor lifestyle). If they do you can always cancel a policy and take out a new one at the new rates BUT a) you will be older so rates may be higher and b) you may be in poorer health and so have to pay a higher premium for cover. I would also look at convertible term insurance - where you have the option of changing the type of cover without evidence of health.
4. crystal ball is good, but I found interesting information about your answer here. http://all-insurance-online.blogspot.com/2007/08/life-insurance.htmlGood luck!
5. Life assurance is a bet which you don't want to win.
6. I am an agent in the US so I am speaking with an American view. How long do you need the insurance? If you need it for 25 years, buy the 25 year. In 5 years, the policy is going to come up for renewal. If you need it for another five years then you will be paying for an increase, no mater how the life expectancy is. You also have to consider if you will be insurable in five years. If you can't qualify for a new policy, then the extra 5 a month will be cheap.