All your questions and everything you need to know about life cover in one place. Our advisers are happy to talk over your options. We always recommend a meeting so we can get to know you so we can make a personal recommendation before taking out life cover. This article is a great starting point in understanding the importance of cover and what types of cover are available.
What is life cover?
Life cover pays out a specified sum on your death. The money can be used to pay off your mortgage debt and any funds left over can go to your family and repay any personal debts e.g credit card, loans, car finance etc.
Do I need life cover?
If you have a partner, family or anyone who is dependent on you then having life cover in place is essential to ensuring that they don’t have the worry of paying the mortgage or worrying about money at an already difficult time.
If you are single with no dependants then critical illness and income protection is of greater importance. You should still consider life cover and this is where our advisers will make a full recommendation when they are working with you.
Life cover is relatively inexpensive and it can be incorporated into many policies even if you are single with no dependants, your family can decide what happens to the property and money after your death.
You may choose to have life cover so that you can assign the house to someone in the event of your death, this may be a sibling or a niece/nephew. You may also want to have life cover in place so that any debts such as loans, credit cards and overdrafts can be paid off and your family is not left to cover the cost of this.
What types of life cover are there?
You can choose to have a term policy which is for a set number of years. This is typically the number of years left on your mortgage or you can choose to have a whole of life policy. This is unrestricted by term and will pay out whenever you die.
Will the life cover pay out the same amount whenever I die?
This depends on your type of policy. You can have decreasing term insurance which is a cheaper option because the pay out gradually reduces and is in line with your mortgage balance. As long as the mortgage interest rate does not go above a certain level (this can vary from 7% to 10% depending how the life cover is set up) your mortgage debt should be paid off.
You could have a level term policy and the sum insured stays the same throughout the policy so it would pay out the same if you claimed in year 1 or year 25.
I have life cover through my employer so do I need separate life cover?
Some employers offer death in service benefit which will pay out a lump sum if you die while in employment. It’s often 4 x your salary. Our advice would be to think of this as a nice to have as it is not guaranteed, your employer may change your terms and conditions, you may change employer or you may no longer be working. Therefore you would not have this benefit and would have to find insurance down the line when it may be more expensive due to age or medical circumstances. It may also not be enough to protect the debt and therefore taking out your own cover is best practice.
Will my premiums change?
Premiums can be set on a guaranteed basis so that you know exactly what you will be paying for the duration of your policy and we would recommend this. There are polices with renewable premiums where the premiums are reviewed and can increase during the term. However, our advisers would recommend guaranteed premiums where possible.
How much life assurance do I need?
Our advisers are here to help you work this out. Your mortgage may seem like the most important thing but you also have to consider what and who you leave behind. If you have a family you can choose to have extra options in place to make sure they are well looked after. We will work through your circumstances, concerns and wishes to establish the right cover.
What if I have a pre-existing condition?
This is where we are here to help. We work with a number of providers and ensure the right research is done. We approach a provider who can cover the condition whether that be on standard terms or with an additional premium for the additional risk.
With a panel of the best providers and best policies out there we are often able to find those who previously thought they could not get cover in place the right cover for them.
What does putting the policy in Trust mean?
Writing a policy in Trust simply means the proceeds from any claim on your life policy are put into the right hands, at the right time and to the right place.
If your policy isn’t written in Trust then the proceeds of the claim would form part of your estate and could take up to anything between 6-18 months to be settled, sometimes even longer depending on the circumstances. If the policy is in Trust the money sits out with this and the funds are then allocated straight away meaning that the family you leave behind are not left worrying about finances at an already distressing time.
Our advisers make sure that clients policies are written this way and will help you with this process when you work with us