personal Life Insurance policy provides a lump sum of money for family
members in the event of the policyholder’s death during the term of the
It is primarily designed to help protect immediate family members and
other dependents from financial hardship by providing the means to pay
mortgage on the family home and/or by providing income to the surviving
to maintain their standard of living.
life insurance policies cover a fixed term,
often linked to the duration of a mortgage, and therefore Life
also be known as Term Life Insurance, Mortgage
Insurance and Term Assurance.
type of Life Insurance is required?
the policy is to be used solely to cover a
repayment mortgage, then a decreasing
term Mortgage Life
is usually the best choice, as
the amount of money the policyholder has been insured for decreases in
with the value of the outstanding mortgage balance.
life insurance product
is usually the best choice for
where the value of the outstanding mortgage balance remains constant
during the term of the policy.
term Mortgage Life Insurance is also the preferred choice for the
other main usage for term life insurance, namely providing family
until the children leave home, or until the surviving spouse has
retired. It is
often advisable to consider an index-linked policy in this instance to
counteract the effects of inflation on the value calculated to provide
sufficient protection for the family. This is also sometimes known as
Increasing Term Assurance.
you are looking to cover a repayment
mortgage AND provide additional family protection,
the best option may well be to apply for two policies, one decreasing
term to cover the repayment mortgage and one level term to provide the
additional family protection. The other option is to simply apply for a
term policy on the basis that over time the policy will be increasingly
towards the additional family protection element as the value of the
outstanding mortgage loan decreases, and at the same time it will cover
increases in inflation.
much Life Insurance is required?
amount of cover required is always going to depend on an
individual’s circumstances. Essentially, you need to work out the
impact to your family in the event of your death, and how much money
need to survive. Or if you have a budget I can let you know how much
leading life insurance policies include Terminal
Illness Insurance at
no extra cost. In the event that the policyholder is diagnosed with a
terminal illness (defined as where life expectancy is less than 12
then the insurer will agree to pay the amount of money insured on
rather than death.
cover can be provided with Critical Illness
which pays out the amount of money
insured should the policyholder be diagnosed with having one of the
Critical Illnesses. I always provide ‘key facts’ with my quotes so you
what you are covered for.
can be put in place on a Joint Life basis, however recently
it has become more cost efficient and flexible to have separate