Protection should always be considered before you need it – just like car insurance. Policies are always cheapest when you are young, fit & healthy so the sooner you put a policy in place, the better.
Income Protection provides a regular tax-free income for policyholders if they are unable to work due to accident or sickness. It is available to both the employed and the self-employed.
Once the benefits have started, they will continue until the policy expires, or the insured person returns to work or dies. Usually, the policy will have a fixed term to the standard retirement age.
Critical illness cover pays out a tax-free lump sum to policyholders if, during the term of the policy, they are diagnosed with one of a number of specified ‘critical’ illnesses or conditions, such as: cancer, Parkinson’s Disease, Multiple Sclerosis, paralysis following a heart attack or stroke, or HIV/AIDS as a result of a blood transfusion.
The lump sum can help pay off your mortgage, debts, pay for medical assistance – or you a luxury holiday! It’s up yo you how you spend it.
Life insurance policies pay out either a lump sum or a series of payments should you die during the life, or ‘term’ of a policy, usually to your dependents. In most instances, the pay-out is tax-free.
The pay-out can be used to pay off your mortgage, provide an income for your dependents, or fund a savings plan for your children.
Policies can be set up from just £8 a month and can be completely tailored to you and your needs.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances.
A typical fee is £495.
As always, this depends on your individual circumstances and goals. For example, if you are taking out the policy to ensure your home is protected, you clearly need to have a policy big enough to pay off your mortgage.
However, critical illness payments are often used to convert people’s homes after a serious illness, e.g. the addition of a stair lift, wider doors or a downstairs toilet for ease of access.
As always, if you are unsure in any way, seek the help of an experienced adviser.
This depends on your individual circumstances, in particular whether you can afford a long ‘deferred’ period, e.g. one year. Often, this will depend on the amount of time your employer will support you when you are off work. Be sure to discuss this with an experienced broker, as you don’t want to be caught short.
This depends upon the type of policy you have.
In most cases, if you stop paying the premiums to your policy, then after a certain amount of time your life assurance cover will cease to be provided, i.e. your policy cover will lapse.
If, at a time in the future, you wished to reinstate the policy then fresh medical evidence would normally be required by the life assurance company before new cover could be offered.
It’s vital to review your life cover on a regular basis, but certainly when there are major changes to your life, such as the birth of a child, a marriage, a new job or home.
The life assurance company must decide if you are an acceptable risk. If you, or any members of your family, have a history of illness, they will want to check on your general state of health before deciding what premiums to charge for the insurance cover you require.
In most cases, life assurance companies are able to offer terms without the need for you to undergo a medical, although they do have the right to request an examination if they feel it is necessary.
However, just because they request a medical does not necessarily mean they are going to charge you higher premiums.
Yes. These are known as ‘joint life’ policies, and they pay out if either of you should die during the lifetime of the policy. If the second person is not your spouse then you will need to prove that their death would cause you a ‘financial loss’.
Your first consideration should be the level of insurance cover required. Ask yourself questions such as: how much money do I need to pay off all my debts? How much money do my dependents require to live the same lifestyle that they currently enjoy?
Once you have decided on the level of cover, you then must decide on the type of insurance required. Do you want a policy that pays out a lump sum or one that provides a regular income? Do you want to pay a little more and use your policy as a savings plan? Do you even want a plan that pays out irrespective of whether you die during the lifetime of the policy?
Once this has been established, you are in a position to compare the premiums required by the various life assurance companies. However, you should always read the terms of the policy to check any restrictions or exclusions contained within it, such as death caused by undertaking a hazardous pursuit.
Yes. A large number of life policies are ‘term assurance’ policies, of which there are many different kinds. These are:
Level term assurance: the premiums you pay and the amount of cover you have remain constant throughout the term of the policy.
Decreasing term assurance: the amount of cover decreases over the term of the policy, although you continue to pay the same premiums. This type of policy could be used to pay off a debt that decreases over a period of time, for example, a repayment mortgage. It could also be used to cover a potential inheritance tax liability.
Renewable term assurance: life assurance that pays out if you die within the period of protection, but which gives you the option to renew the cover at the end of the term without having to provide evidence of health (as long as you are not older than a certain age, e.g. 65). Although the premiums are likely to be higher, the life office will not be able to refuse you the new insurance.
The premiums for life assurance policies vary according to your personal circumstances, for example, age, medical history and your goals (see below)
Your choice of life assurance company can also affect premium levels: some will naturally be more competitive than others. Speak to an experienced financial adviser to ensure you are getting the best rate.