Life Insurance
What is Life Cover?
In most cases, life insurance only pays out a lump sum if you pass away during the term of the policy. It's designed to help your family to maintain their lifestyle after you've gone, like covering mortgage payments or children's university fees.
What is a Terminal Illness benefit?
Some insurers will provide what's called a terminal illness benefit as part of their life insurance cover.
This means you can receive your life insurance pay out before you pass away if you're diagnosed with a terminal illness that meets the policy definition, and you're not expected to live longer than 12 months.
Who needs Life Cover?
Life cover is designed to repay your mortgage if you pass away, you might want to consider it if:
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You do not have life cover at work
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You want to ensure loved ones have financial security
How does Life Cover work?
The next thing to consider is whether you want level cover or decreasing cover.
Level Cover - You choose a lump sum that meets your needs, and how long you want your cover to run for. You will then pay the same amount each month until your policy ends. You might choose this option if you want to help cover interest only mortgage payments and other financial commitments. You can choose to make your cover amount increase in line with inflation. This means that your monthly payments may rise but ensures that the lump sum won't be worth less in the future because of the rise in the cost of living.
Decreasing Cover - The value of your cover goes down each month, but what you pay stays the same for the duration of the policy. This option is most suitable if you have a repayment mortgage.
How much cover do you need?
You need a policy that covers your mortgage amount in full.
