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Any information or advice on this site does not constitute a personal recommendation. If you have any doubts as to whether a product or service is suitable for you, please seek independent advice.


Life insurance

Term insurance for family or mortgage protection

Provides a lump sum on death.

 

Many policies will now provide this lump sum on the diagnosis of a terminal illness.

 

Advisers recommend a lump sum of about 10 times a salary for family protection.

 

The minimum type of protection for a mortgage or similar large commitment.

 

This type of policy will benefit your family or estate upon your death. It takes many forms but in it's most basic format - called term insurance -it  pays a lump sum on death. You may already have some form of similar cover, e.g. for your mortgage.

 

You are covered for as long as you pay the monthly premium. Your premiums are not invested - if you survive beyond the payment term (say, 10 or 20 years) you receive no money back.

 

The absence of any cash-in value is what generally makes term insurance the cheapest form of insurance cover.

 

If you cease to pay the premiums the policy lapses and your protection will end. Generally speaking, the higher the lump sum payable on death, the higher the premiums, although a number of other factors will influence the cost of cover including your age and sex, the term of the policy, your general health and whether or not you are a smoker.

 

Advisers recommend a lump sum of about 10 times your salary in order to produce a viable income for your family, although cover can of course be arranged to protect a specific requirement, such as an outstanding mortgage balance or other debts.

 

There are a number of different types of term life insurance policies with the most common probably being:

 

Level Term You are insured for the same amount throughout the agreed term of the policy. For example, if you take out a 15 year term insurance policy with a sum assured of 250,000, that amount will be paid on death at any time over the 15 year term.

 

Decreasing Term The sum insured reduces by a fixed amount each year, decreasing to nil at the end of the term. You would typically take out this type of policy to cover the liability of a repayment mortgage, where the amount owed to the mortgage lender decreases over the mortgage term. Although the amount of cover reduces over the term, the premium paid is normally fixed to stay the same throughout the term.

 

A number of investment policies may also incorporate some life cover. If you are unsure about which type of policy is best for you should always seek advice.

 

The costs of Term Insurance have fallen markedly over the early part of 2006, and it could be that you are paying for a policy that isn't really competitive in the current market.

 

If you have taken out Term Insurance in the last few years, particularly if you have a policy with your mortgage provider, you might be surprised to see how much you could save every month by rebroking your policy.

 

To get a term insurance quotation use our online life insurance quote request form.