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Types of Life Insurance
Life cover pays a cash sum to your family (or whoever you decide) if you die. Policies are designed to help families cope with the financial pressure of losing the household's main earner.
Some policies also offer Family Income Benefit which can provide a regular income as well as a single payment. There are different types of life cover, for different needs.
One of the most common types of life insurance policy. With level term insurance you are covered for a set period of time which you choose when you take out the policy and it will pay out a fixed amount if you die within the agreed term of the policy.This policy is normally best for people who want to know their dependants will be provided for until they are old enough to take care of themselves.
With decreasing term insurance you are covered for a set period of time but the level of the cover decreases every month until it reaches zero at the end of the term.This policy is best for people who know their sum insured is decreasing. For example, if they have a repayment mortgage which is reducing the amount they owe month by month.
Whole of life assurance does not expire after a fixed term and when you die, the policy pays out a lump sum to your loved ones. Buying whole of life cover is usually more expensive than buying a fixed term policy.
Critical Illness Cover pays you a tax-free cash lump sum if you are diagnosed as having one of the illnesses specified in the policy unable to work due to illness.This cover can help with care costs, medical bills and your financial commitments and is often combined with life insurance for extra peace of mind.
This type of policy normally pays a monthly or annual income to your family instead of a lump sum.Both one-off payments and family income benefit can be written into ‘Trust’, this ensures the money goes to the right people at the right time and often mitigates the issue of inheritance tax.
Taking out an index linked policy means your policy is linked to the rate of inflation ensuring your payout keeps its value over the long term.
Many couples prefer to purchase joint insurance, which usually works out cheaper than purchasing two separate policies.
Frequently Asked Questions
The amount of cover you should take out will depend on your situation, for example the size of your mortgage, debt and outgoing expenses, as well the size of your family.
It’s advisable to think about what your future needs will be too.But try not to worry - when you talk to us we’ll undertake a thorough review of your situation and make recommendations to help you reach the right decision so you get the right cover for your needs.
Many of our customers choose policies where the premiums are fixed and so they are guaranteed not to rise and you’ll know exactly where you stand.However, we can agree lower starting premiums with insurance providers through ‘reviewable premiums’.
These type of premiums don’t suit everyone because they can go up when they are reviewed on the fifth anniversary of you starting your policy.We’ll explain our recommendations and discuss all the options to make sure that we get you the right policy and type of premium for your needs.
Ill health can put up the cost of your policy premiums, however it is still possible to find cover.We deal with specialist insurers who will provide cover for customers with pre-existing medical conditions – they’re specially selected to provide good value for people with medical conditions.
It is important that you are honest and you give us all the right information about your medical history so we can find you the best possible cover for your circumstances.
Whether or not you need a medical examination will depend on your individual circumstances and how much cover you need – in most circumstances no examination is required.When you speak to us, we’ll guide you through the questions about your lifestyle and health.
If your medical history is complicated and you have health problems you are more likely to need one.
But don’t worry, our experienced advisors will discuss your options with you in the strictest confidence and your doctor can not be contacted by any insurer without your permission.
In the last few years, life insurance costs have really come down.The Money Advice Service has said that now is a good time to shop around to see if you can get a better premium.
We may be able to find you a better deal and if you do decide to switch we can help you cancel your existing policy at the right time, so your cover doesn’t lapse and your loved ones remain protected.
Life insurance pay outs are exempt from income and capital gains tax, but are subject to inheritance tax.Essential Insurance can help you place your policy into trust FREE OF CHARGE which can help mitigate this risk.
At Essential insurance we can provide cover for people up to age 90 years of age.
Although the cost of cover generally rises as you get older, we’ll find you the best deal we can.