To get a quote for level term insurance click on the quote now button above, or call us on 0844 875 55 33. Level term assurance is normally used for interest only mortgages or family protection. If the policy is being used for family protection consideration should be given to using a trust.
If your main concern is protecting your family or other dependants, term insurance is often the cheapest way to buy all the cover you need.
Term Assurance - pays a tax-free lump sum in the event of death during a specified period in return for a fixed monthly, or annual, premium. At the end of the term the policy finishes and there is no maturity value. As a result this is the cheapest and simplest form of life cover available. There are two types available, Level and Decreasing.
The cost of the assurance premiums will vary from person to person depending on factors such as age, health and occupation, but for all policies it is crucial to ensure you keep up the monthly premium payments to keep cover in place.
Term assurance policies may also offer the option to pay an extra premium and receive a payout in the event the policyholder is diagnosed with a critical or terminal illness.
Level Term - provides a lump sum, which will remain constant during the term of the plan. Level Term Life Insurance has a level of cover, which remains the same throughout the term of your policy. You decide the number of years the policy will be in force and the level of cover you require at the outset. The level term life insurance policy can be set up as either a single life plan or as a joint life first death policy, where the sum insured is payable on the first death. You could however for very little additional cost each have a policy which would double the sum insured as you would each hold separate plans.
Decreasing Term also known as Mortgage Protection - provides lump sum payment, which decreases during the term of the plan. This type of plan is usually arranged to protect a Capital and Interest Repayment Mortgage
In this case, as the capital repayable is slowly reducing over the mortgage term in order that the balance owed reaches zero on the last day of the mortgage, it is sensible to have life cover whose sum assured payable on death is designed to reduce at a similar rate. Such plans are known as Decreasing Term Assurance or Mortgage Protection Plans. Because the life cover is designed to reduce over the term in line with the mortgage balance, the cost of this cover is the lowest of the plans on the market.
Family Income Benefit - is another form of term assurance. It will pay a regular monthly tax-free income in the event of death to your dependants for the remainder of the term of the policy. This type of plan is usually more expensive than the other life insurance options outlined above. Family income benefit provides a slightly different payout; the benefit upon your death is provided to your family in regular payments rather than in a lump sum, giving them a regular income over a selected period of time. The term is chosen at the outset of the policy, and this type of policy would usually be taken to replace a lost salary or to provide an income for a particular purpose, such as children's education expenses.
With Family Income Benefit, you decide the term ahead of time, perhaps to match your expected income-earning years. So if you die with five years to go on the term of the policy, it pays out the benefit to your dependent for the next five years. If you die with only six months to go to the end of the term, your family will only receive six months' worth of benefit.
Critical Illness - is an optional extra under all Term Assurance Plans which allows for the lump sum to be paid not only on death, but also in the event of diagnosis of certain critical illnesses, such as Heart Attack, Stroke, Major Organ Transplant, Blindness, Total and Permanent Disability etc. Critical Illness can be provided on either a guaranteed or reviewable premium basis.
Critical illness cover can include debilitating but not necessarily fatal conditions such as heart attack or stroke, cancer, multiple sclerosis, loss of limbs, etc., and the cover pays a lump sum on diagnosis - not for treatment of the condition, as you would expect with a health insurance policy.
As with any coverage, it is important to be sure exactly which conditions the policy covers, and which it doesn't. A policy will be very specific as to the illnesses it will pay out for; critical illness policies can also range from basic coverage, which will include just the main critical illnesses such as cancer, to comprehensive policies that cover a more extensive range of conditions.
Full disclosure of any and all existing medical conditions and history is vital when arranging critical illness cover. Failure to disclose could result in denial of payment when an illness is diagnosed - just when that payment is needed most.
Guaranteed premiums offer the most security, as the premium charged for the cover will never change during the term of the policy, however they are the more expensive option.
Reviewable premiums are more affordable initially however premium levels are normally reviewed on a regular basis after the first five years and are likely to increase.
Terminal Illness - This benefit means that the sum assured will pay out if you are diagnosed as having less than 12 months to live - in simple terms an advance payout. The majority of term life policies include terminal illness as standard at no additional cost. Terminal Illness should not be confused with critical illness, which is an entirely different benefit.
Waiver of Premium - Premium payment protection, or waiver of premium. Waiver of premium benefit is available as an additional option on most protection policies including term life insurance, mortgage protection, family income benefit and critical illness cover.
If you are unable to work due to illness or injury the insurance company will continue to pay the premiums to your policy until you return to work or your policy finishes. The payment of your premiums begins after a set waiting period called a deferred period, which you choose when applying for your cover. This is called the 'deferred period' and can be 8, 13, 26, or 52 weeks long. The longer the deferred period the lower the cost of this option will be.
Waiver of Premium benefit typically costs between 3 to 5 % of the policy premium but may increase if you have a history of certain medical conditions or an occupation with hazardous duties. In some instances waiver can be applied for on both lives if applying for a joint life application, however this will increase the cost.
QUESTIONS & ANSWERS
Who can apply for life cover?
Anyone aged between 18 and 65 who lives in the UK.
Do you offer joint life plans?
Yes. We offer both joint and single life plans. If you both choose critical illness cover, then this will automatically cover you both. Alternatively why not compare the cost of two single life plans against the cost of a joint life plan. See next question below.
Is it better to get joint cover or two separate policies?
A joint policy will be slightly cheaper than two separate ones. But remember your joint cover will end if a claim is made. With two single policies, one isn't affected by a claim on the other. And single cover could prove more practical if you ever part company with the person you've got joint cover with.
What about the benificiary?
Most commonly, policyholders will name their spouse and/or their children as beneficiaries of their life insurance, while other family members may be an option for the unmarried and childless. Beneficiaries are not limited to family - a business partner is also a popular option.
Is Level Term Insurance suitable to cover an interest-only mortgage?
Yes, but the plan provides you with life insurance only (and serious illness cover if you've chosen to include this). It will only pay out if you make a valid claim. You should always have another means of repaying your interest-only mortgage, for example an ISA or other investment product. As soon as the sum insured is paid out under a term policy then the plan ceases. If you survive the term and the sum insured has not become payable then the plan ceases and nothing is paid out, as this type of policy has no cash in value at any time.
What is waiver of premium?
For a small additional premium this option will ensure that in the event of long-term ill health either through sickness or accident you are unable to pay the premiums then after a short/deferred-waiting period the insurer will pay your premiums.
What happens if I stop making payments?
If you cancel your direct debit payments to the insurer your cover will stop. You won't be insured and no money will be returned to you.
What happens if I change my mind?
Not a problem. You have the right to cancel your plan within 30 days of setting your cover up.
Do I get any money back if I don't die or fall seriously ill before the end of my plan?
No. The plan provides life insurance only and there is no cash-in value at any time. It has no savings content.
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