The Protection your family deserves

We all like to think we will live to a ripe old age, but we all know that some of us will not. Sadly, we all know those who were cut down by accident or disease while still young, leaving dependants with little more than debt.

It’s that thought that should make us think about providing for our own loved ones if anything happens to us.  Of course, that is what Life Insurance is for. But do you have the right kind of Life Insurance?

Different types of life cover

There are many types of life cover available, all designed to offer peace of mind and provide cash support for those you leave behind. But there are some important differences, and it is important to get the type that’s right for your particular circumstances.

Whole-of-life cover

Most Life insurance is ‘term’ insurance, and pays out if you die before a specified date. Whole of life cover, as its the name suggests, guarantees payment regardless of when you die.  We will all die eventually, so this type of insurance is much more expensive than other types of cover. However, it does offer complete peace of mind and can be used as part of estate planning, as a way of reducing Inheritance tax.

Level term insurance

This type of cover pays out a fixed lump sum if you die during the policy term. This figure doesn’t change, so you’ll know exactly how much your dependants will be left.  However, a set sum may not be the best way to answer your family’s needs for the long term.

Increasing term insurance

Rather than provide a set sum, many people prefer a policy that reflects the rising cost of living.  Increasing term, or index-linked term life insurance automatically increases the sum insured each year by a fixed amount or in line with inflation.  However, as the insured sum rises, so will the premiums, so be prepared to pay more as time goes on.

Decreasing term insurance

Decreasing term insurance takes the opposite approach. Also known as mortgage life insurance, it is ideal to cover debts that reduce over time. You might take out a policy to cover £200,000 worth of mortgage, but as the mortgage is paid off, you could find yourself ‘over-insured’ and paying more than is necessary in premiums. Decreasing term insurance avoids this, and you’ll pay lower premiums than you would with other life cover products.

Renewable term insurance

This type of policy offers cover for a fixed period, which can be extended without further medical checks. Your premiums may increase in line with your age, but any health problems you’ve suffered will not be reflected in the cost of the policy.

Joint life insurance

Couples may consider a joint life policy, rather than two single policies, as premiums are usually cheaper. However, these policies are usually written on a ‘first death’ basis, so it will pay out when one person dies, and the surviving party will have to find another policy.

Family income benefit

Family income benefit policies are a type of decreasing term policy, but instead of a lump sum, they pay out a regular income to your beneficiaries until the policy’s expiration date.

Getting the right type of cover, and the right level of cover for your needs is important, and can be easier if you can call on expert help. At Continuum we would be happy to provide any help and advice you need.