Level term life insurance is where the premiums and amount of cover stay the same during a policy term. In other words, the amount of cover is ‘level’.
- This type of policy can help your family meet various ongoing living costs if you die.
- Can be used to pay off an interest only mortgage
Decreasing term Life Insurance is a type of insurance that’s designed to help protect a repayment mortgage.
The amount of cover reduces roughly in line with the way a repayment mortgage decreases. Premiums stay the same during the length of the policy.
A cash sum would be paid out if you die or are diagnosed with a terminal illness with a life expectancy of less than 12 months, while you’re covered by the policy.
This could be a suitable option giving you peace of mind that your family can continue living in their home if something happens to you.
The simplest way to describe increasing term cover is a life insurance policy whereby the amount insured increases by the amount of inflation each year. As the sum insured increases, your premium will also rise to reflect the increased benefit. Arranging increasing cover with an ‘index-linked option’ will help to offset the effects of inflation.
Most policies can be arranged to increase in line with the retail price index, or in the case of some insurers, by a specific percentage eg 5 per cent per annum.
You only have to look at your weekly shopping bill or the cost of fuel to see how prices have increased over the years. We recommend index linking to maintain the value of the amount you insure.
If you should change your mind:
Most providers allow an ‘opt-out’. You will receive a letter from your insurance company every year informing you of your new premiums and benefits for the following year. At this stage, you can opt-out of the indexation, and your premiums and benefits will be frozen at their current levels.
Family income benefit, or FIB, is a type of life insurance policy. Where it’s different from standard life insurance is that it pays out a regular monthly income, rather than a lump sum. It can be used to cover spousal maintenance payments, provide money for the monthly bills or payments for school fees.
Whole-of-life insurance is a type of life insurance policy that guarantees to payout a lump sum whenever you die.
This is in contrast to level/ decreasing or increasing term life insurance. Which only guarantee that there will be a pay out should you die within the specified term of the policy.
The premiums for Whole of Life Insurance policies tend to be more expensive than those of Term policies, as they are guaranteed to pay out.
The actual cost of your whole-of-life insurance policy will come down to a host of factors about you, such as how much cover you want, your age, your health and your lifestyle.
If you cancel or stop paying your premiums, you won’t get any money back. There is no investment value in the Whole of Life Insurance policies that we arrange.
Why do people choose Whole of Life policies?
There are many reasons why people choose whole of life policies. Not least because they are guaranteed to pay out whenever you die. They can be used to:
- Cover their funeral costs or to leave a lump sum for family
- A Whole of Life policy could be used to help cover a potential Inheritance tax liability (IHT)*
Upon death, (IHT) is paid on any part of your estate that exceeds £325,000 (or, £650,000 for couples). These levels are called the ‘nil rate band’ up to these amounts no IHT is payable.
The current rate of IHT is 40%. *The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
A guaranteed over 50’s plan is a Whole of Life Insurance plan that pays out a cash sum when you die. Sometimes it is also called Life insurance for seniors.
Acceptance is guaranteed, with no medicals or health questionnaires to complete; quite simply you will be covered regardless of any health issues you may have, as long as you are between the ages of 50 and 80*.
A guaranteed over 50’s plan can leave money to those you care about, giving them the flexibility to use it in a way that suits them:
- Help with funeral costs
- Pay off outstanding debts or bills
- Leave as a gift for grandchildren