Life Insurance

If you have a mortgage and dependents who live with you, taking out life insurance should certainly be considered. This cover should ensure that, were you to die, the family home can be retained. It should preferably also provide an additional financial cushion at such a difficult time.

 

    People who are employees may have what are called “death-in-service” benefits from their workplace, typically equivalent to two to four years’ salary. (We recommend you check if you have this if you’re unsure).

    We will consider what life cover you already have from your employer and elsewhere. And then, provide a recommendation on any extra cover you may need.

    The basic type of life insurance is “level term assurance”, which pays out a fixed sum if you die during the specific term of the policy. Alternatively “Decreasing term assurance” pays out a decreasing sum and is often linked to a repayment-style mortgage. The cover reduces over time to reflect the declining balance of the mortgage.

    What’s covered?
    Lump sum payment – You can choose the level of cover and the policy will pay the full amount after a successful claim

    Protection if you die – The policy pays a lump sum if you pass away during the policy term – simple as that

    Terminal illness – The possibility to receive your lump sum payment early if you’re diagnosed with a terminal illness that meets the terms of the policy and you’re not expected to live longer than 12 months. Once payment is made your policy will end and no further claims will be paid

    Flexible length of cover – You can choose the length of cover you need. The policy may be a short-term or long-term

     

     

    When a policy won’t pay out?
    Not paying your premiums – If your payments stop, so does your cover

    No cash-in value – The policy may have no cash-in value at any time

    Death outside the policy term – You choose how long your policy lasts. Once it’s finished, then your cover will stop and you won’t receive a payment if you die

    Suicide and self-inflicted injuries in the first year – Many policies won’t provide cover if you die in the first 12 months of the policy as a result of suicide or intentional, self-inflicted injury

     

     

    Whole-of-life Insurance

    Whole-of-life insurance pays out a lump sum whenever you die and has no fixed term.  It is often used in inheritance tax (IHT) planning, where it is taken out to cover future IHT liabilities. Where a life insurance policy is written “in trust”, the policy proceeds are IHT-free. The premiums you pay may also be exempt from IHT.