Life & Criticall Illness Cover
There are two main types of life insurance and one type of life assurance.
Life insurance is for a specified term whereas life assurance has no specified
policy term.
We are able to offer you any insurance policy that you need as we use
a panel of the top insurance companies and should you want advice on assurance
policies then we are able to introduce you to an independent financial adviser.
There are 2 main types of insurance policies:
- Level Term Insurance
This offers a level sum insured throughout a specific
period in return for a level premium. For example £100,000 of life and critical
illness cover would pay out £100,000 if a specified event happened tomorrow
or alternatively the same £100,000 if the event happened after 24 years
of a 25 year policy. It carries no cash in value at any time and is ‘pure
protection’. If a policy is taken for 25 years and there are no claims made
then the policy will expire after 25 years and there will no longer be any
cover provided.
- Decreasing Term Insurance / Mortgage Protection
This is a policy designed to protect the balance outstanding
on a capital repayment mortgage as the amount of cover reduces along with
the reducing mortgage balance. There is still a level premium for the term
of the policy but this tends to be lower than the ‘level term policy’ as
the longer the policy holder lives then the less the insurer will have to
pay out if a specified event happened. Unlike the level term insurance policy,
it will not leave you with a potential tax free lump sum after repayment
of the mortgage as it will only repay the outstanding mortgage balance at
the time of the specified event, whether there is £100,000 outstanding or
only £10,000 on the mortgage.
These two types of policy can be taken with life cover, critical illness
cover, joint life and critical illness or 1st event life and critical illness
cover.
- Life Cover
This is designed to repay the sum insured on the death
of the policy holder during a specific term.
- Critical Illness Cover
This is designed to repay the sum insured if the policy
holder is diagnosed with a specified illness regardless of whether that
illness prevents them from working. The insurer will specify a list of ‘critical
conditions’ on which it will pay out the sum assured to the policyholder
but this differs between Companies. Although the term ‘critical’ implies
that you will die, the specified illnesses do not need to be terminal and
the policy holder may suffer a mild heart attack, survive and the policy
will pay out.
- Joint Life & Critical Illness Cover
This is available with level term policies and enables
the policy holder to potentially claim twice on the policy. If they are
diagnosed with a specified critical illness then it will pay out the sum
assured and then in the event of the death of the borrower during the policy
term then it will pay out the sum assured under the life insurance.
- 1st Event Life and Critical Illness
As the name suggests this will only pay out once and tends to be
a cost effective way of borrowers protecting themselves against all eventualities.