Life Insurance

Term Assurance, often referred to as life insurance, is designed to provide cash either by lump sum or regular payments in the event of death during a specified period of time.

Term Assurance policies have no surrender value at any time. If no claim is made the policy will cease at the end of the term without value. The cost of this type of life insurance is lower than 'whole of life' policies for a given amount of cover. Term Assurance will normally be for a set term, for example at the end of which it may be that the family will be self-sufficient and not reliant on the person originally insured.

There are essentially 3 types of life insurance for mortgages.

Level Term Assurance

This is where the amount of life insurance, or sum assured, remains level throughout the term of the policy. If you are taking out life insurance to protect your loved ones in the event of your death you may consider level term assurance to ensure that the level of protection remains constant. You will also need level term assurance if you have taken out an interest-only mortgage.

Decreasing Term Assurance

This type of life insurance is specifically designed to protect a capital repayment mortgage in the event of death and is often known as mortgage protection insurance. The sum assured decreases over the term of the policy roughly in line with your outstanding mortgage debt, although the premium will be determined at the outset and will normally remain the same throughout. Decreasing Term Assurance is usually cheaper than Level Term Assurance and with some insurers you will be able to select the interest rate on which the reducing cover will be based.

Indexed

Occasionally if you have assigned your policy to a lender, conditions may not automatically allow you to benefit personally but may insist that the sum assured repay the debt.


Critical Illness Cover

This type of insurance is designed to cover a specified range of critical illnesses and will pay out a lump sum if you are diagnosed with a serious illness during the policy term. It is not designed to replace lost income; a separate type of insurance, Income Protection is tailored to meet this need.

It is important to seek guidance when looking at critical illness insurance as policy conditions, illness definitions and survival conditions vary considerably from company to company.

Critical illness insurance provides financial assistance to help you cope with the impact of surviving a serious illness. The payout can be used to repay or reduce a mortgage or other financial commitments or provide funds to assist with recovery or purchase special equipment.

A serious or critical illness is one which is regarded by the medical profession as life threatening and examples are heart attack, stroke, cancer, major organ transplant, kidney failure. You should check the details of any policy for the exact list of conditions covered.

If you would like to discuss your insurance with us and receive insurance advice please fill in our enquiry form, or call us on 0141 2273962.