This is an add-on product sometimes offered alongside Life Insurance. Where you are unable to pay your premiums for a pre-specified reason, it allows you to still be covered until you return to work or for a pre-set period of time – often the remainder of the policy term.
Terminal illness cover is included in your Life Insurance as standard. You don’t need to select this option within your application as it is automatically added. If you have been diagnosed with less than 12 months to live, you could claim for an early pay-out from your Life Insurance policy.
Whole of life aims to cover you for the whole of your life. This means premiums need to be paid until you die, though it can be limited to a specific age (check with your insurer). It is typically more expensive than Life Insurance due to this guaranteed pay-out. Whole of life is commonly referred to as life assurance.
Joint Life Insurance will cover two lives under one policy. This means there will only ever be one pay-out, upon the death of the first policyholder. After this claim has been made the policy will cease and no pay-out can be claimed on the death of the second policyholder. If you are looking to cover multiple lives then you have two options; take out a joint Life Insurance policy or two single policies.
Increasing term insurance is almost the exact opposite to mortgage term life insurance. With this type of policy the cover amount increases as the policy ages, which compensates for inflation typically, for this reason an increasing term policy will be more expensive.
This is where the policy premiums are fixed within the set policy term. No matter what happens, your premiums will never change.
This is the process where the insurer collects information about your health, lifestyle and occupation, which helps determine an accurate price.
The estate refers to your assets owned at the time of death, including property, personal possessions, financial benefit and Life Insurance. If you write your Life Insurance policy in Trust then it doesn’t form part of the estate.
This is a tax free lump sum payment that some employers provide, if you die whilst in their employment. The pay-out is a multiple of your salary, usually 4 times your salary. Check to see if death in service makes up part of your benefits package.
Combined life and critical illness cover will link both benefits into one policy. Under one policy you can only make one claim, so if a claim is made upon diagnosis for one of our critical illnesses then no claim can be made upon death in the future. After a claim is paid the policy will then cease. See here for more details.
The Association of British Insurers (ABI) is a trade organisation representing UK British insurance companies. They are heavily involved in debates surrounding policy and set product recommendations for products in the insurance industry.
Decreasing term insurance allows you to set the cover amount, but this cover amount will decrease as the policy ages, assuming a mortgage rate of 6%. This means that if your mortgage interest rate is 6% or lower than the policy can clear your outstanding debt, but if your interest rate is higher than 6% you may want to consider increasing your percentage to 7-8% to clear your Mortage debt in full. This is also commonly referred to as mortgage term life insurance.
A Trustee is someone who is responsible for distributing a Life Insurance pay-out to the beneficiaries. They are chosen by the policyholder when the policy was written in Trust.
Some people find it difficult to take out life insurance if they have already been diagnosed with a serious medical condition, due to the fact that there are many insurance companies who will not allow policies to these people. There are however some companies that will still allow you to take out an insurance policy at a higher premium. There are other companies that offer policies which exclude cover for the disease you have been diagnosed with but will cover you if you die from a cause that is unrelated to it. You should check with an insurance company directly to find out exactly what is covered by the policies they offer, this way you can find out if the plan is relevant to you or not before you sign up.
The payout that your family receive as the result of your life insurance will not be taxed by capital gains or income tax. However there is a chance that it may fall under inheritance tax in some situations. This can be easily avoided if you make sure that when you are writing your policy it is written “in trust”. Writing it up “in trust” allows the payout to go straight to your dependents without being in anyway affected by inheritance tax.