LIFE INSURANCE

What is life insurance?

Life insurance policies are contracts between you and an insurer that agrees to pay your loved ones a guaranteed lump-sum should you die during the term of the agreement. If you have dependants, this policy is one option to help protect your family financially both now and into the future should the worst happen.

The cost of the policy will vary according to a number of contributing factors including your age when applying and your lifestyle activities as a whole. However, if you do not die during the term there will be no cash value payable to you.

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Policy key features

  • You want to provide your family with a lump sum payment should you die during the term the policy is in existence.
  • Available on a level term or decreasing term basis.
  • Policies are offered as single or joint life provided added choice to couples.
  • Control the length of the term and the amount of cover you want.

Benefits of insuring through us

Hassle free

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Risk assessment

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Wide product choice

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Tailored policies

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Valuable insights

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Claims settlement

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Some key things to consider

Amount of cover

This is a very personal decisions and will depend on you and your family’s circumstances at the time of wanting to arrange cover. If you were to die, it is worth noting the key financial commitments you would want to be settled. Commonly this includes an outstanding mortgage or to maintain living standards.

The ideal amount of cover will be sufficient to ensure your loved ones are protected financially. Any payouts made during the term will be tax-free and placing the policy in trust can help avoid an inheritance tax liability.

Reason for insuring

In the case for mortgages, the method of repayment will have an effect on the type of policy you will arrange. Capital repayment mortgages will require a decreasing term policy as the debt reduces over time, whereas interest only loans will require a level term policy. Your lender may require you to have a relevant policy in place as a condition for providing finance.

If your plan is to cover future costs of further education such as university for your children, the amount of cover required will be significantly higher if alongside the obligation to cover an outstanding mortgage.

Overall cost

Although ensuring the right amount of cover is in place, it is also sensible to make sure any premiums are affordable on an ongoing basis. Failing to keep up with payments will lead to your cover ceasing. There are a number of ways to ensure an adequate level of protection is maintained at an affordable cost.

Ways to reduce insurance premiums

  • Reduce the term of the policy, as long periods generate greater risk to the insurer. Making small changes to the policy length can make a significant difference to premiums charged, especially when dealing with maturities around retirement age.
  • Two single policies may be more appropriate if two individuals of a couple have different income levels.
  • Make an effort to improve your health so you are demonstrating to potential insurers your willingness to take care of yourself.
Life insurance

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Single or joint policy?

If married or in a long-term relationship, a joint policy may be a suitable option. Cover is provided to both individuals, but only a single payment will be made on the first death if within the term of the policy. The payment will be made tax-free and is a cost effective option as cheaper than two separate single policies being in force. Where simultaneous death occurs, only one payment will be made.

Difference between life insurance and whole of life cover

Life insurance is different to term assurance which is also referred to as ‘whole of life’ policies. Although the names are commonly confused, these two policies do share distinct differences in terms of the cover they provide, costs and any exclusions that may be included.

Frequently asked questions

What are term-based insurance policies?

Term-based insurance policies are the most common forms available. The insurer will only pay out if you die during the term the policy is in place. Any payout will be the sum insured from the outset after which the policy will cease. Where no death occurs and the policy comes to an end, there is no cash value.

Are policy premiums fixed?

With term-based insurance policies, premiums remain fixed and are agreed at the time of application. A method of making premiums cheaper is to opt for decreasing term instead of level term cover. Among the length of the term and the sum insured, your age at the time of applying will be a large factor in the premium charged going forward.

Can older people buy life insurance?

Yes – however as you get older your premiums will increase. It is possible to obtain life insurance even when in your fifties, however the number of potential insurers is lower than if you were younger.

How much cover do I need?

The ideal amount of cover depends on your personal circumstances. It is advisable to ensure expected future obligations are covered. This may include an outstanding mortgages along with covering the rising costs of university tuition. In order to gain a true understanding of the sum insured, a full analysis of your situation is required.

How long should the term length be?

To decide this, you will first need to consider the reasons for obtaining insurance in the first place. It is generally advisable to opt for a term that lasts as long as any outstanding debt obligations such as a mortgage, and until your children reach adulthood and are self-sufficient. Your age when applying will have a large effect on the premium that will be charged.

Do I need life insurance?

If you are a single individual with no dependants, you probably do not need to have life insurance in place. However, if you have a growing family who may struggle to cope financially without your income in the event of death, it may be a worthwhile consideration.

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