Life Insurance FAQ's
What is Life insurance? Life insurance provides an agreed amount of money for your family if you pass away or are diagnosed with a terminal illness. This money can be used to pay off the mortgage or any other debts and also provides an income for your family. Premiums can be guaranteed so that the monthly costs do not increase over the term of the policy.The limitations of this policy are that the term (length of the policy in years) cannot be extended and the sum assured will not increase with inflation, so be sure to consider this when taking out the policy.
How much cover will I need?This will depend on your circumstances, but you would want to at least cover the mortgage and any other debts you may have. The idea is to cover enough so that your family don’t have to struggle once you are gone. This will obviously vary from household to household, but remember that the higher the amount of cover, the higher the monthly payment.It should be noted that if you opt for joint life insurance, the policy is only paid on the first policyholder to die. If you would like to have life insurance that will continue if a policyholder dies e.g. to provide for children, you should consider separate policies.
How long should I get cover for?This again will depend on your individual circumstances however making sure you are covered for the length of the mortgage or until you retire would give you peace of mind. Another option is to get insurance until your children are no longer financially dependant on you.
Where can I get Life insurance?Most mortgage providers will discuss life insurance policies with you, however it is advisable to shop around and get a few quotes before making any decisions.
How often do I have to pay premiums?Some policies allow you to choose between monthly or annual payments which will need to be paid for the entire term (number of years you opt to have cover for).
Why does the premium vary so much in price?The premium will vary depending on how long you have taken the policy out for and for how much. Also the type of policy you choose affects the cost.
What does Waiver of Premium mean?This means that if the policyholder is unable to work for a period of six months or longer due to illness or injury the monthly premium will be paid on their behalf.
Critical Illness Cover
What is Critical Illness cover? Critical illness cover is usually sold with life insurance policies and they are paid out if you suffer any critical illnesses within the term of the policy. Each insurance provider will cover different critical illnesses so it is worth taking a closer look and comparing each policy document before making your decision. Additionally on paying out for a critical illness diagnosis some policies will cover total and permanent disability which is not limited to any of the illnesses listed in the term of the policy. Limitations of a critical illness policy are dependant on the policy wording for example some insurers will cover more illnesses but the premiums will be higher. Also, when buying combined life insurance and critical illness cover the payout is usually for either a critical illness or a death whichever comes first.
Family income Benefit
What is Family Income Benefit (FIB)? Family income benefit is a type of Life Insurance policy whereby a monthly sum is paid out after the policyholder’s death for an agreed amount of time. For example, a 10 year FIB policy is taken out for £10,000 per annum, after 3 years the policyholder dies so the policy will pay £10,000 per annum for the remaining 7 years.
Income Protection Insurance What is Income Protection Insurance? Income Protection Insurance covers the policyholder if they are unable to work for a period of time. The policyholder must wait an initial deferred period before making a claim and this length of time will be stated in your policy document.
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Related Products:
Family Income Benefit | Critical Illness Cover | Total and Permanent Disability Cover | Joint Life Cover |