Life insurance can provide invaluable protection for your family when you die. There are a number of different types of policy available, and it can be difficult to find the right product to suit your needs. Here are some of the most commonly asked questions that people ask when they start shopping for a life insurance policy:
What is term life insurance?
Term life insurance is the most popular type of life insurance policy available on the market. This type of policy pays out a lump sum if you die during the term of the policy, which can range from between five and twenty five years.
What is whole of life insurance?
Whole of life insurance, as the name suggests, covers you for the whole of your life, and is guaranteed to pay out when you die. Because you are guaranteed a payout, whole of life cover is usually more expensive than term life insurance.
Are you able to have more than one life insurance policy?
Yes, you are perfectly entitled to take out more than one life insurance policy. If you have an existing policy but your circumstances have changed for example, then it might be worthwhile taking out an additional policy
If you have an existing policy is it worth shopping around for a better deal?
If you have a life insurance policy in place then you may benefit financially by switching your insurance provider. However, bear in mind that your age plays a crucial factor when calculating the price of your premium so if you have had your policy for a number of years you could find that it is cheaper to continue with your existing policy rather than change insurers. Generally, the older you are, the more expensive are your premiums.
What is mortgage life insurance?
A mortgage life insurance policy is similar to a standard life insurance policy, but it is specially designed to pay off any debt owing should the policyholder die during the term of the mortgage.
What is level term insurance?
This is a type of term insurance policy where the amount of cover is fixed for the duration of the policy.
What is convertible term insurance?
Convertible term insurance is a term insurance policy that can be converted to a whole of life or endowment policy at the end of the term without it being necessary to provide additional medical evidence.
What is decreasing term insurance?
This is a type of term insurance policy whereby the amount of cover decreases over time and is often taken out alongside a repayment mortgage.
What is critical illness cover?
Critical illness cover pays out if you are diagnosed with one of the conditions specified in the policy. It can be purchased as a stand-alone policy or combined with a life insurance policy.
What is terminal illness cover?
Terminal illness cover is similar to critical illness cover and pays out if you are diagnosed with a terminal illness.
How do I find out how much cover I need?
The amount of cover that you need will depend on your personal circumstances and requirements. You can find life insurance calculators online, although it is advisable to consult an expert if you are unsure.
How much will I have to pay in premiums?
The cost of your premiums will vary depending upon the provider and the type of product you choose. Factors that determine your premium include the length of the policy term, the sum assured, and the cover and options you purchase. Insurers will also take into account your age, your height and weight, your family and personal medical history, your occupation, your marital status and whether or not you have children.
Are life insurance payouts subject to tax?
You do not have to pay income tax or capital gains tax on life insurance payouts. However, your beneficiaries could be liable to pay inheritance tax on the funds; you can avoid this by having your life insurance policy written in trust.
How do I write life insurance in trust?
When you take out your policy you will be given the option of writing it in trust; this is usually free. Writing life insurance in trust can have a number of advantages including defining the way that a payout will be used, inheritance tax benefits, and speeding up payment processing times by bypassing probate.
Should I take out income protection?
Whether or not you need income protection is highly dependent upon your circumstances. A good income protection policy can be extremely beneficial, and can be purchased as a stand-alone policy or as an additional product when taking out life insurance or critical illness cover.
What are the benefits of taking out a joint life insurance policy?
Joint policies are often cheaper than two separate life insurance policies and can be taken out by partners. Bear in mind that they only pay out once so if one partner died during the term of the policy then the surviving partner would not be insured. This type of policy is more suited to couples who do not have children.
What is a family income benefit policy?
This type of life insurance policy covers the monthly income of the policyholder for a specific length of time should the person die during the policy term.