Death is a subject that no one wants to think about; unfortunately the reality is that a sudden death can often leave loved ones in need of financial support. This is especially true if the deceased was the main source of income.
Having adequate
life insurance provides us with the peace of mind in knowing that our family will have that financial support in the event of our death.
Life insurance (also known as
term assurance) is available on a single or joint life basis with benefits that include a payout on the diagnosis of terminal illness. It’s worth remembering that should the policy holder cease paying the premiums at any stage, then the policy will have no value. Also, if the policy holder is still alive when the policy expires, then no payment will be made.
There are different types of insurance cover available. They include:
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Decreasing term life insurance – these are generally used to ensure that in the event of death or terminal illness, a lump sum is made available to help pay off the mortgage. The amount of insurance made available decreases at the same rate that you pay your mortgage. For example, you have a 25 year mortgage for £125,000; after 20 years you only have £10,000 left to pay, therefore, in the event of your death, the insurance would cover the remaining £10,000.
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Level term insurance – this will pay out a lump some if the policy holder dies during the policy term. They are normally great value, with some premiums starting at just £5 per month. Terminal illness is also covered.
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Renewable term insurance – on the date of expiry there is the option to renew the policy without the need of a health review.
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Convertible term insurance – this allows you to convert the policy into permanent cover when the original policy comes to an end. The main attraction to this is that you cannot be refused the right to take out the new policy regardless of your current health.
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Index linked term insurance – this means the policy payout amount will increase each year in relation to the Retail Price Index.
