Life Insurance Protection Options

Business Protection

There are several ways in which to protect yourself and your family from the financial impact of an untimely death.

Most people take out life assurance to provide for their families and alleviate any financial worries at a difficult time.

Level Term Assurance pays a lump sum in the event of death during the term of the policy. There is no investment element within a term assurance contract so at the end of the term there is no maturity value and life cover ends. Any death claim is paid tax-free and premiums are usually monthly, and fixed throughout the term. Because the term and benefit are known from the outset, and there is no investment content, term assurance can be a cost-effective method of protection.

A Level Term policy might give you more cover than you need, so it is important that the policy matches your requirements. The reason being is that the higher the sum of money you are assured for, the higher the monthly premiums. If the policy is not manageable and affordable for you in the long term, it runs the risk of the policy lapsing. If your mortgage is your only concern, then a decreasing term policy may be more suitable if you are looking to only cover the costs of your mortgage. This tends to be the cheaper option but can be only be used on repayment mortgage and not interest free repayments.

Level term policies do not cover you for the rest of your life, the maximum age limit with most insurance providers is age 90. A whole of life option maybe more suitable should you look to protect yourself beyond this age however this is usually a more expensive option.

You can purchase a level term policy for yourself or for you and a partner – known as a single or joint policy respectively. A consideration with a joint level term policy is that when either of the two holders of the policy die, the other person will not be covered by the joint policy any longer and will require a new policy to make sure they’re protected. Bearing this in mind, it may be more beneficial to set up two single level term policies - ensuring that no matter what happens, both partners are protected. In some cases, we can set up joint policies that pay-out once the second person dies. If this is something you're interested in, we can help set this up for you.

Decreasing Term Assurance (somtimes also known as Mortgage Protection) works similarly to Level Term Assurance, but the benefit is set at outset and gradually decreases over the term of the policy. These policies can be used as cover for a repayment mortgage, or other loans where the amount of capital outstanding also decreases over time. Because the benefit reduces over time, the premiums are usually lower than for Level Term Assurance.

A Mortgage Protection policy simply provides financial cover for your mortgage if you pass away before you finish paying it off. This means that your loved ones are left with peace of mind and a mortgage free home.

Mortgage Protection policies tend to be cheaper than Level Term and are suitable for those looking to cover their mortgages. It is usually a requirement by the bank or building society providing the mortgage service that you have some form of life insurance in place before the mortgage starts, and a decreasing term life insurance policy is suitable for this.

Whole of life Cover assurance policy runs up until the day you die and has no expiry date. It is designed to pay out a guaranteed lump sum as long as premiums are paid until the date of death. It ensures that no matter when you die, your loved ones will receive a lump sum payout from your insurer. This is in contrast to term life insurance, which only guarantees that there will be a pay out should you die within the specified term of the policy.

Whole of Life cover can be expensive when compared to level term or mortgage protection life insurance because a claim is inevitable. It can be taken out by anyone at any age, however if you're older with no mortgage and no dependants you could use whole of life to leave an inheritance or to cover the costs of your funeral.

Disclaimer: No information contained within this website should be construed as advice, you should seek professional advice based on your individual circumstances. This is based upon our understanding of the law of England & Wales and HMRC regulation and practice, both of which may be subject to future changes. (For residents of Scotland, Scottish Law and tax rates may be different)

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