Your Options
Life Insurance(Term Insurance)
The simplest and cheapest type of life insurance is known as term
insurance because you choose how long you wish the cover to last, for example 20
years (the term). Term insurance can be an individual policy, a joint policy, a
family policy or a specialist policy. A term policy
is designed to protect your family, should the worst happen, by ensuring you leave
them with sufficient capital to maintain their lifestyle and repay any debts or
mortgage. At such a difficult time knowing you have provided financial security
will help your family to face the future.
There are three principle types of term insurance:-
Level Term
Level term insurance pays out a guaranteed cash sum
if you die during the term of the policy. Most policies also pay out if you are
diagnosed as suffering from a terminal illness and are expected to survive less
than 12 months. You can take out a policy on your own or as a joint policy with
your partner. For joint life policies the cash sum is payable only once on the first
death.
Decreasing Term(or Mortgage Protection)
Decreasing term (also known as mortgage protection) pays out a cash sum if you die
during the term of the policy and is designed to be used alongside a repayment mortgage.
The cash sum assured decreases broadly in line with your mortgage to pay off the
outstanding balance and is therefore cheaper than level term. If you have an interest
only mortgage you may decide that a level term insurance policy is better suited
to your needs. Decreasing term is available on a single or joint life basis.
Increasing Term(or Indexed)
Increasing term is a term policy with an indexation
option that allows you to increase your benefits annually in line with inflation
or by a fixed percentage with a corresponding increase to the premium.
Critical Illness Cover
Critical illness cover provides a payment following a successful claim of one of a range of defined, survivable illnesses, such as a heart attack. This is different from a Life Insurance policy that provides lump sum protection in the event of death. Critical illness policies may be on a single or joint life basis.
Income Protection(or Permanent Health Insurance PHI)
Income Protection, or Permanent Health Insurance (PHI) as it used to be called,
provides you with a monthly tax free payment to replace your income if you are unable
to work due to sickness or accident (and with some policies redundancy). There is
no payment should you die and/or any cash sum if you are diagnosed with a critical
illness.
Family Income Benefit
As with other types of life insurance, a Family Income Benefit protection policy is designed to maintain a family’s income at an acceptable level if the main income provider dies. It will provide your dependents with a monthly income, rather than a lump sum in the event of your death. The agreed amount is paid from the time a successful claim has been agreed through to the end of the term chosen at the outset of the policy. Family Income Benefit does not involve any investment, and there is no surrender value. It’s often cheaper than other types of life insurance policy.
The cost of a term policy depends on a number of factors, including:
- The term of the policy
-
Level of cover you require
-
Your age and lifestyle
Having life insurance needn’t be expensive though – in fact, premiums
start from just a few pounds a month.
What is Right for me?
We are all likely to experience many significant life changes as we get older, such as getting married, having children or buying a house, and it’s important to make sure your family will be protected in the event that you are no longer around.
Getting Married
Marrying the one you love will be the best day of your life. But how would your partner cope financially if you were no longer around?
Starting a new chapter in your lives together means you will likely be planning heavily for your future; having children, buying a family home, and even planning for your children’s future. So it’s vital to ensure these plans are protected in the event that the worst happens.
Buying life insurance with eLife means that in the event of your death, your dependents will have financial security to help move forward with their lives.
Addition to the family
Having children is an exciting time. But will your child’s future be secure if you are not here to see them grow up?
There are so many things to think about as your child grows up, like education, health, and enjoying a happy home. But no one can be certain what the future holds, and so you need to ensure their future is protected in the event of your death.
Buying life insurance with eLife means that, should you pass away, you can provide financially for your child’s future.
Moving House
Buying your first home is an exhilarating milestone. But who will face the financial burden of your mortgage if you pass away?
Moving into your first home will bring with it a lot of financial–planning, from covering mortgage payments to paying utility bills. But you must also consider how the costs of your mortgage would be covered in the event of your death.
Buying life insurance with eLife means that if you die with a mortgage outstanding, your family will have a level of financial security to help cover the costs or, depending on the size of your mortgage and level of cover, could clear your mortgage completely.
How much cover do I need?
The amount of life insurance you require depends entirely on you. It is your decision and there is no right or wrong answer, but some things you may want to think about include:
- What do you want to have life insurance for?
- Is it to have security for your family in the event of your death, or is it to repay an outstanding mortgage?
In addition to this, you may also want to think about:
-
How much is your mortgage?
-
What type of mortgage do you have?
-
What are your average family living expenses?
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If you have savings, what might these earn for your family in interest?
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For how long will your children be dependent on your income and what education or other commitments might you be required to meet?
In addition to these factors, it is also worth bearing in mind the rising rate of inflation, and what these costs might be in 10, 15 or even 20 years’ time. You should consider what income would be required to keep your dependents in the same standard of living as they currently enjoy, and for how long, should you die.
What options should I consider?
- Level or decreasing term insurance
- Guaranteed This means the premiums are guaranteed to remain the same for the duration of the plan, unless you increase the amount of cover via an indexation option.
- Waiver of Premium Waiver of premium option will pay your premium if you are unable to work through sickness or accident and ensures your cover continues until you are back at work.
- Terminal illness This benefit is usually a standard feature and means the cash sum will be paid early if you are diagnosed with a terminal illness.
- Writing the policy under trust Writing your policy under trust ensures that the proceeds are payable, tax free without delay to the beneficiaries of your choice. Full details are available via the Trusts page, with links to insurer sites to enable you to find the most suitable type of trust for your circumstances together with trust forms which can be downloaded. More complicated arrangements may require qualified legal advice.
- Making a will
- Indexation The indexation option allows you to increase your benefits annually in line with inflation or at a fixed percentage, with a corresponding increase in the premium.
Did you know?
- Diseases of the heart and circulatory system (cardiovascular disease or CVD) were
the main cause of death in the UK in 2004.
(Source: www.heartstats.org
May 2007).
- Stroke is the third most common cause of death in the UK. It is also the single
most common cause of severe disability and more than 250,000 people live with disabilities
caused by stroke.
(Source: www.stroke.org.uk
May 2007).
- An Aviva survey revealed that 50% of the adult population have no life cover.
Making a Claim
All claims are managed directly between the insurance company and the policy holder.
When your policy has started the insurer will send you a pack confirming the terms
& conditions together with a contact number to call in the event of a claim. The
information required will depend on the type of policy and nature of the claim.
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