Life insurance applications can be made on a joint basis, usually with a spouse or partner. The annual sum is payable on the first or second death of the lives assured within the term of the plan. It is usually recommended that a 'waiver of contribution benefit' is included – at a slight extra cost. This is to provide for premium payments in the event of long term ill health or incapacity. This commences after a waiting period, when premiums then are taken up by the insurer on your behalf.
Level Term Assurance
With level term assurance, the amount of cover stays constant during the term of the plan and there is no investment element. The potential disadvantage is that if you fall ill after the policy expires, you could have difficulty replacing the cover.
Decreasing Term Assurance
This type of plan is commonly associated with mortgages, and is referred to as ‘Mortgage Protection Insurance’. The amount that it pays out reduces over the term of the policy to reflect the reducing debt under a repayment mortgage. Because of this, premiums are typically lower with this type of assurance than with level term assurance.
Increasing Term Assurance
In direct contrast to a decreasing term plan, this type of policy pays an amount that increases over the term, thus helping to counteract the effects of inflation on the real value of the benefit payable.
Convertible Term Assurance
Convertible Term Assurance allows the policyholder to change the Term Assurance into either an endowment policy or a whole-life policy, with up to the same amount of cover at any time before the end of the term of the original policy.
Renewable Term Assurance
This policy allows clients to effect a term assurance policy for a specified period, at the end of which the client is then given the guaranteed right to effect a similar policy for a similar term, without having to give the insurance company any evidence that he or she is still in good health. However, these types pf plan have no cash value at the end the term. If premiums are not maintained, the cover will lapse.
Critical illness insurance is a form of protection insurance that can be taken to protect yourself if you were to suffer from an illness that renders you unable to work, or incapacitates you. These are usually defined within the policy. Critical Illness insurance cover is often taken as a combined plan with life insurance.
Family Income Benefit
These policies are designed to provide a tax-free annual income for your family should the insured person die during the term of the plan. The benefit is payable between the date of death and the end of the selected term. Premiums can be paid monthly or annually, and the pay out is in the form of a regular ‘salary’, ensuring that there is minimum financial disruption to the bereaved family.
Income Protection pays you a benefit if you can’t work due to ill health or accidental injury.This benefit starts after an agreed period of time, called a deferred period.