Life Insurance

Life assurance or life insurance is a policy that covers the life of a person in monetary terms in return for a payment, usually each month, and is known as a life assurance premium. Term assurance is the cheapest and simplest form of life cover, providing life assurance for a fixed term.

It is well worth considering what would happen if you died. If you have a major debt, such as a mortgage, you should have a life assurance policy that will provide your dependants with funds to clear the mortgage debt off. Many employers will offer death-in-service benefit of around three times your salary, but your own circumstances will determine if this is going to be sufficient to cover you over the remaining term of your mortgage. Many mortgage lenders will insist term cover is in place, if not you should consider it sooner rather than later.

Level Term Assurance assures the sum payable does not change during the term of the policy. Level term assurance is most suitable when the loan has a fixed capital value, which will remain unchanged throughout the term of the loan, for example an interest only mortgage.

Decreasing Term Assurance is where the sum assured decreases over the term of the policy. This is mainly used to protect a capital & interest repayment mortgage, which will decrease over the term of the policy.

Policies can cover a single life or be on a joint life basis.

Critical illness cover is an additional benefit that can be added to a life insurance policy. The sum assured is payable on the conclusive diagnosis of a critical illness, such as cancer, a heart attack, multiple sclerosis or a stroke – (see critical illness section).

Life insurance premiums vary depending on whether or not you are a smoker or non-smoker. A non-smoker is generally defined as someone who has not smoked cigarettes within the last 12 months. Life insurance premiums will also vary dependent on whether you are male or female.