Most people have two main protection needs that can be covered by life insurance (often known as life assurance):
- Paying off large debts like your mortgage.
- Family protection, where you leave behind money for your family to live on after you’ve died.
The most basic type of life insurance is called term insurance. With term insurance you choose the amount you want to be insured for and the period for which you want cover. If you die within the term, the policy pays out to your beneficiaries. If you don’t die during the term, the policy doesn’t pay out and the premiums you’ve paid are not returned to you.
There are different types of life insurance policies which are good for different protection need, the most common ones are:
- Level-term life insurance policies- A level-term policy pays out a lump sum if you die within the specified term. The amount you’re covered for remains level throughout the term – hence the name. The monthly or annual premiums you pay usually stay the same, too. Level-term policies can be a good option for family protection, where you want to leave a lump sum that your family can invest to live on after you’ve gone. It can also be a good option if you need a specified amount of cover for a certain length of time.
- Decreasing-term life insurance policies- With a decreasing-term policy, the amount you’re covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgages. Premiums are usually significantly cheaper than for level-term cover as the amount insured reduces as time goes on. Decreasing-term insurance policies can also be used for inheritance tax planning purposes.
- Family income benefit policies- Family income benefit life insurance is a type of decreasing term policy. Instead of a lump sum, it pays out a regular income to your beneficiaries until the policy’s expiry date if you die.
Critical Illness Insurance
- What is critical illness cover?- Critical illness cover pays out a cash lump sum if you’re diagnosed with one of a number of listed critical illnesses, including some types of cancer, a heart attack or stroke, multiple sclerosis or the loss of limbs.
- Why might I need critical illness cover?- Many people buy life insurance to leave a payout for their family if they die. However, within a given timescale, you’re much more likely to develop a critical illness than to die. A critical illness policy could be used to pay for medical treatment, cover adaptations to your home (such as mobility aids, special equipment or structural changes required due to a disability) or to pay off your mortgage. In fact, it can be used for anything.
- How much does critical illness cover cost?- Critical illness cover premiums tend to rise with age, but will also depend on your personal medical history and that of your family. Some policies may charge you less if they exclude a pre-existing condition. Critical illness cover is often sold alongside life insurance. This can reduce the cost of critical illness cover.
Most employers won’t support their staff for more than a year if they’re off sick from work. Millions of us have insurance policies such as mortgage insurance, private medical insurance and payment protection insurance (PPI), and yet, while all of these products do have a role to play, the one protection policy that every working adult in the UK should consider is the very one most of us don’t have is Income Protection.
- What is income protection?- Income protection insurance is a long-term insurance policy to help you if you can’t work because you are in a long-term illness or are injured in accident which could prevent you from working long term. It replaces part of your income if you can’t work because you become long term ill or disabled. It pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner.
These are a sample of the providers that we use