Life Cover
It is a sad fact that the majority of families in the UK are under-insured and this often leads to hardship and distress that is entirely avoidable. A person should obviously insure any mortgage or borrowings in the event of their death, but what about providing for those left behind?
There are various forms of life assurance such as Level, Decreasing, Convertible, Renewable and Whole Life and we list below a brief description of each.
Level Term Assurance
Provides a set sum insured over a specific term. During this term obviously if anything occurs the sum insured will be payable. At the end of the period of insurance there is no continuation of cover, automatic right to re-insurance.
Mortgage Protection
Is a type of Decreasing Term Assurance policy. The initial amount of life cover reduces each year, closely matching the outstanding capital debt on your mortgage.
This Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk
Convertible Term Assurance
Again restricts the duration of the cover to a specific term. It provides some protection against changing circumstances, as the term assurance is convertible. This means for example, that should you fall ill near the expiry of the policy term, you can convert the policy to Whole of Life plan or Endowment policy regardless of your then state of health. Clearly, this is a valuable facility.
Renewable Term Assurance
Is similar to Level or Convertible in that the sum insured remains constant throughout the term but at the end of the specified period you have the option to renew the policy for the original sum insured without medical evidence. Again may prove to be a valuable facility. If you decide to renew, the premium will be based on your age at that time.
Whole of Life Assurance
As the name suggests, a whole of life policy can provide life cover without imposing a limited term. A unit-linked plan allows the premiums to be kept lower as they are based on the expectation of some future fund growth. Unit values can of course fall as well as rise.
There is a choice between the maximum and minimum levels of cover available at given levels of premium. Standard cover basically allows the same level of life cover to be kept up throughout life, as long as the fund achieves a specified minimum annual growth rate. If this rate is not achieved you will either need to increase the premium to maintain cover or to decrease the level of cover to a sustainable level. Whatever level of initial cover is chosen, that amount is guaranteed to be maintained for a specified term (normally ten years).
Why do you need life Assurance?
You should as a minimum cover all your liabilities such as, mortgage borrowings personal loans, car loans, credit card debt etc.
A further lump sum can be generated in the event of the main wage earner’s death to ensure that the family lifestyle can be maintained.
Do you want to leave your families future to chance?
If you would like to discuss your life cover options then please contact us.