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Insurance is about providing financial security for people who depend on you if you die, or suffer illness. Therefore if you don’t have a partner, spouse, children or other dependants you may not need life cover depending on your circumstances.
Decreasing Term Insurance or Mortgage Protection – the level of cover you choose reduces over the specified time agreed and is usually bought in line with a repayment mortgage so that your cover meets the demand of the debt.
Advantages
1. It’s one of the cheapest and simplest forms of insurance.
2. It covers you for a specified period of time.
3. You can cover a single life or joint lives.
Disadvantages
1. It only pays out if you die within the specified time agreed.
2. If you obtain a joint policy and one of you die the policy will pay out but then the other life will lose their cover as the policy will only pay out once.
3. Medical evidence will be required and possibly an examination for those in poor health.
Level Term Insurance – you choose the amount of life cover required and it remains level throughout the term agreed, this type of policy is more commonly used if you have an interest only mortgage. It can however also be bought for a repayment mortgage and thus will give you money should you die to repay your debt and possibly have surplus.
Advantages
1. Your level of cover does not reduce.
2. If you sell for a bigger house at any point you may not need to increase your cover by so much as your policy has remained level.
3. If you have dependants it gives you room to repay your mortgage and if on a repayment mortgage will leave a surplus for your dependants.
Disadvantages
1. You only get a payout if you die within the fixed term agreed.
2. It is usually more expensive than a decreasing term insurance.
3. Medical evidence will be required and possibly an examination for those in poor health.
Family Income Benefit – Rather than provide you with a lump sum payout should you die this form of insurance provides you with a regular, tax free income for you and your dependants from the time of the claim to the end of the plan term.
Advantages
1. Cover is often cheaper that other forms of insurance.
2. Provides regular tax free income as opposed to having to make investment decisions if you have a lump sum payout.
3. Can be taken as a lump sum if required.
4. The income benefit can be linked to inflation.
Disadvantages
1. No cash in value
2. Medical evidence will be required and possibly an examination for those in poor health.
Whole of Life Insurance – is for the whole of your life, unlike term insurance, which only pays out during the policy term. It is guaranteed that the policy will pay out on death. The sum insured is paid to your dependants following your death.
Advantages
1. This form of policy always pays out in the end, so some money will always pay out.
2. Suitable policy if you want to leave your family with a lump sum.
Disadvantages
1. It is more expensive as the policy is guaranteed to pay out.
Critical Illness – Provides you with a lump sum upon diagnosis of a specified illness of condition for example cancer. It can be arranged either as a stand alone policy or an add on to a life policy.
Advantages
1. A critical illness can strike at any time, this policy if designed to payout on diagnosis of a specified condition providing peace of mind.
2. Proceeds are tax free.
3. Its possible to protect against a range of conditions and each provider is different so it is important to seek advice and choose the right policy for you.
Disadvantages
1. Premiums are more expensive than basic conventional cover.
2. Comparing policies with different companies can be very difficult because terms and conditions can vary widely.
3. Medical evidence will be required and possibly an examination for those in poor health.
Income Protection – This pays an income if you are unable to work because of illness or injury. This form of policy aims to put you back in the position you were in before you were unable to work. This insurance does not allow you to profit therefore the maximum you can replace is the after tax earnings, less an adjustment made for state benefits you can claim. Income protection is important as it is not possible to rely on state benefits as they are very low and there is no right to state benefits.
Advantages
1. Tax free monthly income
2. Aims to take you back as close to the position you were in before you were unable to work.
3. Provides peace of mind
Disadvantages
1. Premiums can be high depending on how soon you need the income. For example if your employer pays your sick pay for 52 weeks then you would choose a 52 week deferment making the premiums lower than if you only got paid for 4 weeks.
2. Medical evidence will be required and possibly an examination for those in poor health.
Terminology
The sections on the rest of this page explain the different types of Life Insurance and highlight the advantages and disadvantages of each type.
If you still have questions after reading these explanations - Just call us.
Remember, we will always give you impartial advice that will help you make an informed decision. We would rather make you happy than make a sale!
Why?
Well we are in this relationship for the long term, not just for today.
Commodore Finance Limited is an Appointed Representative of Personal Touch Financial Services Limited which is authorised and regulated by the Financial Services Authority
By using this quote button you accept that you are proceeding without advice. Should you want advice you should contact us on 01745 850653.
Please read our Initial Disclosure Document IDD
By using this quote button you accept that you are proceeding without advice. Should you want advice you should contact us on 01745 850653.
Please read our Initial Disclosure Document IDD
By using this quote button you accept that you are proceeding without advice. Should you want advice you should contact us on 01745 850653.
Please read our Initial Disclosure Document IDD
By using this quote button you accept that you are proceeding without advice. Should you want advice you should contact us on 01745 850653.
Please read our Initial Disclosure Document IDD
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