Life Insurance

If you have a partner or family depending on your regular take-home pay, you need to be sure they would be able to survive financially if anything happened to you. Consider that they would still have to find money to pay the mortgage, buy food, cover the bills and even keep the family car running. Level term life insurance would help to replace your income and maintain your family’s standard of living. Alternatively, mortgage decreasing life insurance would just pay off your outstanding mortgage and protect the family home.

Level term life insurance will pay out a cash lump sum if you die during the policy term. This sum is guaranteed from the start of your policy as long as you keep paying your premiums. Your family can use the money however they choose.

Mortgage life insurance is also known as decreasing term insurance. It is designed to pay off the outstanding balance on a standard repayment mortgage if you were to die during the policy term. The value of your cover decreases in line with the amount of money you still owe on your mortgage.

With either policy, your premiums stay the same and you can choose how much cover you need and how long you want it to last. Your policy can cover you and your partner if you wish, and it will pay out on the first death. After that the policy will end. Neither policy has any cash-in value at any time.

Whole of life insurance policies are as they sound and they have an inherent investment value which can be cashed in depending on provider rules.

You can choose how much cover you need and how long you want it to last. When you apply, you will be able to choose different options.

Mortgage life protection is designed to cover the outstanding balance on a repayment mortgage, so you need to take this in to account when applying.

As long as you can answer 'no' to a few health questions, we won't require a medical. You may need a medical if you have suffered a medical condition, either now or in the past. You must give us accurate information, as we may not pay out in the event of a claim if you do not disclose all the information required.

As soon as you have responsibility for a mortgage, partner or family, it makes sense to take out life cover. The cost of life cover gets more expensive the older you get so you may benefit by taking our life cover early.

Life cover can normally be taken out by any UK resident aged 18 to 69. You can take out cover as a single policy (for you) or a joint policy (you and your partner). If you take out cover for two people it will pay out once, when the first person dies, and then the policy will end.

If you add a critical illness option to a life cover policy, it will pay out when the first person dies, or is diagnosed with a critical illness covered by the policy during the period of cover.

Many families depend on the income from both partners, so if either one dies it may leave the family struggling to cope financially. Even if one partner doesn’t work, they may take most of the responsibility of running the home and looking after the children. If they were to die, you might have to work fewer hours, or you may need to pay for home help or childcare.

The premiums you pay for term assurance are set at the time you take out the policy and depend largely on the level of cover, the term you choose, your age at the start, and your state of health.

You will normally be charged more - or even refused cover, if your work, hobbies or lifestyle are deemed to be particularly risky.

Some insurance companies reserve the right to increase the premiums, often substantially, if they experience unusually high levels of claims against their term insurance policies.

If you have taken out a premium payment option and you find you are unable to work due to illness or accidental injury, your premiums will normally be paid for up to six months. If you don’t have any protection, your plan will be cancelled and there will be no cash payout, as the plan has no cash-in value. You should check with your life insurance plan provider for detailed answers.

Normally a claim can only be made if you die within the term of the policy (unless you take out critical illness cover) Your partner or dependants should call the claims telephone number in the policy booklet of your life insurance provider firm. Make sure they are aware of where the policy details are kept, as well as your wishes as to how the lump sum should be spent.

The cash lump sum will be paid to your estate and may be subject to inheritance tax. However it is possible to write your policy in trust, in which case it will be paid directly to the person(s) you nominate, tax free, without having to wait for probate.

Payments are most usually made monthly by direct debit.

You must tell your chosen life insurance provider at the time of your application. They may then write to your doctor or request that you attend a medical examination before a final underwriting decision is made.

Waiver of premium is a life insurance policy option that you can usually add to your cover. It means that if you are unable to work following an accident or illness, the insurer will usually take over premium payments six months after you become unable to work.

The waiver of premium claim stops when you are assessed as fit to return to work.

Life insurance premiums are based on the following factors: your age, whether you smoke, your medical history, the level of cover you need, the length of time you need cover for (the term) and the type of cover you choose.

No, the life cover that is detailed in your quote and confirmed in your policy document is the amount paid in the event of a single valid claim. The sum assured (your level of cover) will be paid if either joint policy holder dies or is diagnosed with a terminal or critical illness (where critical illness is covered). The policy will then end and no further benefits will be paid.

In most cases if you take out a policy and then move abroad later on during the term of your policy, your cover will continue as long as you carry on paying premiums.

Insurers generally recognise that sometimes your protection needs change, and as your needs change, so should your cover. Many polices include flexibility options that allows your cover to adapt with you. You often have the freedom to:

• change the term of your policy
• increase or decrease the amount of cover under your policy
• remove a life from a joint policy where cover is no longer required for that person.

It is a pretty simple reason: your group insurance is completely tied to your employment. Should you lose your job or want to change positions and move on from that company, you will lose your current group coverage. It is also possible that the coverage you have currently is not enough for you or does not meet your specific needs; as it is a policy geared for a group and not geared for any one specific person.

Examine your current situation and your coverage, and then decide what amount of insurance policy would be most beneficial and appropriate for you. Things to consider are which of your needs will last and which will end. When your mortgage is paid off, you will no longer need coverage for that. The same is true for when your child or children grow up and move out to be on their own. You will no longer need to cover them. Other needs might last longer and thus require more coverage.

It is also important to consider your current employment. Do you plan on staying in your current job? And, for how long do you plan to stay there? Are you planning on making a career out of your position, or are you likely to move on from your job to a new one? These are important considerations when determining if you will need additional life insurance coverage and how much additional coverage you will need. Just because you currently have coverage does not mean that it is adequate or that it will last for the length of time that you need that coverage. Consider other types of life insurance regardless of whether you have group insurance or not.

Decreasing Term Life Insurance: This is one of the cheapest ways to protect your mortgage or financial commitments in the event that the worst happens. Most people will tell you that this type of policy is guaranteed to pay out a lump sum on death to cover your mortgage or financial liabilities which is strictly not true. Most of these polices have an interest rate attached to them at the outset and if your mortgage or loan is more than the interest rate on the policy for decreasing term then you will have a shortfall on the amount paid out and the balance of the mortgage or financial commitments you have covered.

A life insurance policy (with the exception of whole of life plans) has no cash value at any time during the term of the policy unless a claim is made. At the end of the term, you stop making payments and your cover ends. It is also worth noting that if you stop making the monthly payments, the cover will cease and again there is no cash value.

Terminal illness cover in most cases is included with your life insurance policy and provides cover for you if you were diagnosed with a terminal illness, meaning you can claim on your life insurance before you die. There will be restrictions and terms and conditions, make sure you read your policy documents when you buy or are buying a plan.

With typical life insurance, there is no limit to the amount you can have other than the ability to afford it. The exception to this is if unrelated people e.g. business partners take out life insurance to cover a joint loan, in which case the amount of cover is limited to the amount of the loan.

Everyone’s needs are different and it depends on your personal circumstances but there are many things to consider like your mortgage, monthly outgoings and financial commitments, your family and the number of children you have that are financial dependant on you.

If you have an interest-only mortgage, the outstanding mortgage debt remains constant throughout the mortgage term. In these circumstances, Level term insurance might be suitable to cover this type of mortgage. Remember that you will need to consider how the mortgage will be repaid at the end of the term.

If you have a repayment mortgage, decreasing term insurance may be appropriate because the amount of cover reduces broadly in line with the decrease in your outstanding mortgage loan.

The money paid out with term insurance life claims are usually free of income and capital gains tax, (although in some cases this varies for higher rate tax payers) but they do form part of the estate and could therefore be liable for inheritance tax.

Yes, normally if you wish to cancel your life insurance policy you can contact the insurance company directly then once you cancel your direct debit payments your cover will stop and you'll no longer be insured. Should you wish to have cover again in the future, it could be more expensive, or even be declined because you will be older and your state of health could have changed. Should you cancel the policy, there is no cash value at any time.

The Financial Services Authority (FSA) regulates insurance companies on behalf of the treasury as per the legislation in place. The FSA regulates the financial services industry. The FSA has four aims as per the Financial Services and Markets Act 2000 which are maintaining market confidence, promoting public understanding of the financial system, the protection of consumers and fighting financial crime. The FSA’s important objective is to maintain efficient, orderly and clean financial markets. They ensure retail consumer gets a fair deal.

On the expiry date there is an option to continue without a health review.

This is Level term insurance with the option to revert to whole life or endowment insurance.

Due to inflation the value of money declines each year. Consequently, this form of insurance combats that with an escalating sum assured.

Some insurers provide the option for the premium to be increased each year in relation to the Retail Price Index.

Life insurance – which is sometimes referred to as life assurance but means exactly the same thing – is the only type of insurance cover that you will not directly benefit from. This is because normally it only pays out when you die, so those you have named as your beneficiaries get the cash instead.

It is designed to give you peace of mind that your family and loved ones are financially protected after you've gone. Life insurance is usually paid as a lump sum - the commonest form is term insurance - though it can also be paid as monthly income if you have a family income benefit policy. It all depends on the type of insurance you have taken out.

Older people often worry that life insurance will cost too much but there is life cover designed especially for over 50s where you benefit from no medical screening.

Confusingly, there are some life insurance products that double up as an investment which pay out even if you don't die. These are a more expensive option known as whole of life policies.

Instead of you and your partner taking out separate insurance policies, you could take out a joint life policy. A 'first death' policy covers both your lives and pays out once on the death of the first of you to die.

A 'last survivor' policy pays out once on the death of the second of you to die. For protecting dependants, the 'first death' option is usually the more appropriate. A joint life policy will be suitable only if you both need to insure for the same amount.

For example, a joint life policy may be ideal for paying off a mortgage in the event of one of you dying, but less suitable as a means of replacing lost income since the income needs will vary depending on which of you has died.

Life insurance cover doesn’t have to stop once you have paid off your mortgage.

If you want it to continue until you die (rather than for a fixed amount of time) you can opt for a whole of life policy.

Given the fact that death, at some point, is inevitable, this can become an expensive option.

For example, while whole of life premiums are static for the first ten years, they start to increase after that point - usually in five year increments.

You will only know what this increase will be once the premiums have been ‘reviewed', which can come as a shock. Premiums will start to rise quite steeply as you get older.

You can opt for guaranteed (or fixed) premiums throughout the entire policy instead - but this means the premiums at the outset are far higher.

You may wish to find out more about the state benefits for which you or your dependants might qualify.

Please consult the relevant leaflets published by the Benefits Agency, an agency of the Department for Work and Pensions (formerly the Department of Social Security / DSS). These are available from your local Benefits Agency, many public libraries, some post offices, by post and from their web site.

Protecting your loved ones is a major priority, especially if you have dependants. How would they cope financially if you were to die? This is where life insurance plays a vital role in your financial planning.

And what if you were unable to work for a prolonged period, due to illness or an accident? In this case, you need to consider critical illness cover.

You can discuss all the options with a life insurance advisor, by filling out the form below. Alternatively, you can research the level of protection you need by reading around the site.

Most people use life cover to make sure their mortgage and other major debts are paid off if they die. However, there are many other factors to consider.

A recent survey by Legal & General valued the work a Mum does round the house and looking after children at £30,000 a year, while Dad does £21,000 of unpaid work in and around the home. Bear in mind that it's not only the loss of a breadwinner's salary which could cause financial hardship: If you are caring for children, your spouse or partner might need to pay for professional childcare and/or babysitters if you were to die.

Then there's the extra cost of running the house and maintaining it to take into account.

If all the cooking, cleaning, childcare, gardening, and so on in the UK had to be paid for at market rates, they would be worth some £340 billion a year. That's around half of the UK Gross Domestic Product.

Lump-sum term assurance policies are the simplest and cheapest form of life insurance.

Essentially, you pay a monthly premium for a set amount of cover for a fixed number of years - known as the term. The policy then guarantees to pay out a lump sum if you die within a set period of time, normally 15, 20 or 25 years.

If the policy expires and you are still alive, no payment is made.

Premiums are significantly more expensive with a whole-of-life policy, which guarantees to pay the sum assured upon your death.

Life insurance, also known as life assurance, is something many people prefer not to think about. In fact, it is estimated that 28 million adults do not have any. However, it is not the only reason - some just find it too complicated. But basic life insurance is simple and gives you a relatively cheap way to provide financial security for your dependants when you pass away.

Other types can be more complicated as they involve investments which introduce an element of risk or the level of detail means you need to be aware of exceptions and exclusions. Costs are based on a number of factors such as age, health and lifestyle, so it's advisable to speak to an expert to help you choose the right cover at the best price for you.

Income protection insurance is an important insurance product for most people, as it is designed to provide cover in the event of a significant loss of income caused by a long-term illness or injury.

This type of insurance is also commonly referred to as Income Replacement Insurance and Permanent Health Insurance (PHI).

If you are unable to work due to health issues, your income protection insurance policy will pay out a tax-free monthly income to compensate for any loss of earnings.

The maximum amount of benefit you receive each month is based on a percentage of your gross earnings (usually around 50% of your pre-tax income).

These monthly payments will continue until you are fit enough to return to work or, if you fail to make a recovery, until the end of the policy term - which is typically your selected retirement date.

No-one likes to think about what would happen if they were to be diagnosed with a critical illness such as cancer, a heart attack or stroke.

However, you can’t afford to ignore the financial implications, as if people depend on your income, they could need protecting.

Critical illness cover pays out a lump sum on diagnosis of a life-threatening illness, provided you survive for at least 14 days.

The policyholder must be diagnosed with any one of a list of serious illnesses including cancer, heart attack, stroke, permanent or total disability, paralysis, major organ transplant and coronary artery bypass surgery. This cover gives you the peace of mind of knowing that you will still be able to support your family and meet financial commitments during the worst of times.

Policies also provide cash to allow you to pursue a less stressful lifestyle while recovering from illness - or for any other purpose to aid your recovery, such as complementary treatments not available through the NHS.

As you get older, taking out life insurance generally becomes more expensive - particularly if you’ve suffered a major illness. However, those aged over 50 can buy basic life insurance pretty cheaply with these policies.

The reason it’s not hugely costly is that everyone is put into the same pot - without the life company doing individual risk assessments.

The advantage of these life assurance policies is that there’s no medical screening and you’re guaranteed to get cover up to around the age of 75 (or even 85 in some cases - depending on the insurance company).

So, it’s an affordable way to leave your family a cash lump sum and give you peace of mind no matter what happens.

You won’t be paid if you die within a year or two of taking out this life insurance - unless in an accident - and do check the individual policy details before signing up. Some companies may have a longer ban on claims in the early years.

Naturally, they are more expensive than policies for people in their 20s with clean bills of health, taking out simple term insurance to cover their life.

And if you have the policy for 30 or 40 years, you could end up paying more in premiums than your family receives after you’re gone.

You generally need to be a UK resident to take out this sort of cover. Finally, if you cancel the policy at any time, you don’t receive anything.

Yes, generally you stop paying any more premiums when you reach 85 or 90 - again depending on the policy you choose - and you’re still covered. Obviously, you can’t wait until you’re 85 and take out this cover for free!

Some life insurance companies will repay the premiums you’ve paid if death occurs within the first couple of years or so, when a ban on claiming is in place.

Income protection insurance is an important insurance product for most people, as it is designed to provide cover in the event of a significant loss of income caused by a long-term illness or injury.

This type of insurance is also commonly referred to as Income Replacement Insurance and Permanent Health Insurance (PHI).

If you are unable to work due to health issues, your income protection insurance policy will pay out a tax-free monthly income to compensate for any loss of earnings.

The maximum amount of benefit you receive each month is based on a percentage of your gross earnings (usually around 50% of your pre-tax income).

These monthly payments will continue until you are fit enough to return to work or, if you fail to make a recovery, until the end of the policy term - which is typically your selected retirement date.

Family income benefit differs slightly from a conventional life insurance policy. Rather than dependents receiving a lump cash sum if the policyholder dies, family income benefit pays a series of monthly tax-free payments to the named benefactors.

These payments run from the time of the claim through to the end of the plan. For instance, if the family income plan runs for a twenty year period, and the claim is made after twelve years, payments continue for the remaining eight years of the plan.

For this reason, family income benefit is often cheaper than term life insurance and other life insurance policies.

Family income benefit is particularly useful for those policyholders who seek a regular monthly income, without worrying about the investment decisions needed to maximize the potential of a lump sum.

Often a funeral plan will guarantee to pay only the current cost of these plus any increase in line with general price inflation. However, in recent years, these costs have tended to increase much faster than inflation.

If this continues to be the case, your estate or relatives could face a bill for a few hundred pounds, despite your having a pre-paid funeral plan. You need to check the small print carefully to see just which costs are guaranteed and which are not.

Larger providers nearly always pay your money into a trust fund. This is an important feature. In a trust fund, the money is safe from misuse by the funeral director and safe from the director's creditors if the firm goes bust.

This means you can be reasonably certain that the money needed to provide your funeral is secure and will be available when needed. Some smaller providers simply pay the money into a client account.

Some life insurance companies apply ratings to people with epilepsy, leading to inflated premiums and more expensive policies. Seeking the advice of a specialist insurance company ensures fair treatment.

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Some life insurance companies apply ratings to people with high blood pressure, leading to inflated premiums and more expensive policies. Seeking the advice of a specialist insurance company ensures fair treatment.