There are two main types of insurance policies:
Level Term Insurance
This offers a level sum insured throughout a specific period in return for a level premium. For example £100,000 of life and critical illness cover would pay out £100,000 if a specified event happened tomorrow or alternatively the same £100,000 if the event happened after 24 years of a 25 year policy. It carries no cash in value at any time and is “pure protection”. If a policy is taken for 25 years and there are no claims made then the policy will expire after 25 years and there will no longer be any cover provided.
Decreasing Term Insurance / Mortgage Protection
This is a policy designed to protect the balance outstanding on a capital repayment mortgage as the amount of cover reduces along with the reducing mortgage balance. There is still a level premium for the term of the policy but this tends to be lower than the “level term policy” as the longer the policy holder lives then the less the insurer will have to pay out if a specified event happened. Unlike the level term insurance policy, it will not leave you with a potential tax free lump sum after repayment of the mortgage as it will only repay the outstanding mortgage balance at the time of the specified event, whether there is £100,000 outstanding or only £10,000 on the mortgage.
These two types of policy can be taken with life cover, critical illness cover, joint life and critical illness or 1st event life and critical illness cover.
- Life Cover
This is designed to repay the sum insured on the death of the policy holder during a specific term.
- Critical Illness Cover
This is designed to repay the sum insured if the policy holder is diagnosed with a specified illness regardless of whether that illness prevents them from working. The insurer will specify a list of “critical conditions” on which it will pay out the sum assured to the policyholder but this differs between Companies. Although the term “critical” implies that you will die, the specified illnesses do not need to be terminal and the policy holder may suffer a mild heart attack, survive and the policy will pay out.
- Joint Life & Critical Illness Cover
This is available with level term policies and enables the policy holder to potentially claim twice on the policy. If they are diagnosed with a specified critical illness then it will pay out the sum assured and then in the event of the death of the borrower during the policy term then it will pay out the sum assured under the life insurance.
- 1st Event Life and Critical Illness
As the name suggests this will only pay out once and tends to be a cost effective way of borrowers protecting themselves against all eventualities.
Following a full financial factfind in which we will discuss your attitude to risk and key protection objectives as well as your budget, can can recommend the most appropriate policies for your particular circumstances.
However, as your life continually changes, we will regularly review your requirements to ensure that the policies continue to meet your needs and update as necessary.