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- Life Insurance
- Family Protection Life Insurance
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What types of cover are there?
The type of term life insurance you take out will depend on whether you wish to protect a mortgage and if so, which type of mortgage, or whether you simply wish to ensure that your family and loved ones are financially secure in the event of your death. The main types of cover are:- Level term life insurance
- Mortgage protection life insurance
- Whole of life insurance
Level Term life insurance is a policy which will pay out a lump sum in the event of a life insured’s death, during the term of the policy. You can select how much cover you need (the sum assured), and how many years you will need the cover for (the term).
With a Level Term insurance, the sum assured chosen at the policy outset will remain the same for the entire term of the policy.
How can Level Term life insurance be used?
Provide a lump sum to your family:
A Level Term insurance policy will give you peace of mind that your family and loved ones will be more financially secure in the event of your death, as they will receive the pay out of the sum assured at that time.
Protect a Mortgage:
Level Term insurance is normally used to cover interest only mortgages where the balance owed to the lender does not reduce, so the same sum assured will be required throughout the entire mortgage term.
Level Term insurance can also be used for a repayment mortgage, however, and under these circumstances as time goes by, in the event of death, the policy will pay out a surplus over and above the outstanding balance of the mortgage. Some customers like this idea as it is providing an increasing excess which can be used to help surviving relatives and loved ones.
Protect a Business Loan or Overdraft
If you are in business you may from time to time borrow money in the form of a formal mortgage or business loan or just in the form of a secured or unsecured overdraft.
A Level Term insurance policy can be used to provide a lump sum on death equal to the amount borrowed to pay off any unsecured or secured debt. In certain circumstances, the premiums can be paid by the business and can be tax deductible.
With a Level Term insurance, the sum assured chosen at the policy outset will remain the same for the entire term of the policy.
How can Level Term life insurance be used?
Provide a lump sum to your family:
A Level Term insurance policy will give you peace of mind that your family and loved ones will be more financially secure in the event of your death, as they will receive the pay out of the sum assured at that time.
Protect a Mortgage:
Level Term insurance is normally used to cover interest only mortgages where the balance owed to the lender does not reduce, so the same sum assured will be required throughout the entire mortgage term.
Level Term insurance can also be used for a repayment mortgage, however, and under these circumstances as time goes by, in the event of death, the policy will pay out a surplus over and above the outstanding balance of the mortgage. Some customers like this idea as it is providing an increasing excess which can be used to help surviving relatives and loved ones.
Protect a Business Loan or Overdraft
If you are in business you may from time to time borrow money in the form of a formal mortgage or business loan or just in the form of a secured or unsecured overdraft.
A Level Term insurance policy can be used to provide a lump sum on death equal to the amount borrowed to pay off any unsecured or secured debt. In certain circumstances, the premiums can be paid by the business and can be tax deductible.
A Mortgage Protection (reducing) life insurance policy will pay out a lump sum in the event of a life insured’s death, during the term of the policy. You can select how much cover you need (sum assured), and how many years you will need the cover for (the term). The sum assured will gradually reduce throughout the term of the policy.
The graph opposite shows an example of how a policy with a £200,000 sum assured taken out over a 25 year term is likely to reduce throughout the policy term.
What can it be used for?
A Mortgage Protection (reducing) life insurance policy is used to cover a repayment mortgage:
The sum assured on a Mortgage Protection (reducing) policy will reduce throughout the term of the policy as it is designed to cover a repayment mortgage, where the outstanding balance reduces, as the mortgage is paid off. The life insurance policy will therefore pay out enough to pay off the outstanding mortgage debt at the time of death.
The graph shows an example of how a policy with a £200,000 sum assured taken out over a 25 year term is likely to reduce throughout the policy term.
The graph opposite shows an example of how a policy with a £200,000 sum assured taken out over a 25 year term is likely to reduce throughout the policy term.
What can it be used for?
A Mortgage Protection (reducing) life insurance policy is used to cover a repayment mortgage:
The sum assured on a Mortgage Protection (reducing) policy will reduce throughout the term of the policy as it is designed to cover a repayment mortgage, where the outstanding balance reduces, as the mortgage is paid off. The life insurance policy will therefore pay out enough to pay off the outstanding mortgage debt at the time of death.
The graph shows an example of how a policy with a £200,000 sum assured taken out over a 25 year term is likely to reduce throughout the policy term.
Whole of Life assurance is a policy which will pay out a lump sum when you die, whenever this may be. You can select how much cover you need (the sum assured) and provided you continue to pay the premiums the policy is assured to pay out.
As with all life insurance, the premium is higher, the older you are when you take out the policy, but once the policy is in force the premium is guaranteed to remain the same.
A Whole of Life policy can be used to pay for a funeral, pay an Inheritance Tax bill, or simply to provide a cash sum to family or a loved one.
As with all life insurance, the premium is higher, the older you are when you take out the policy, but once the policy is in force the premium is guaranteed to remain the same.
A Whole of Life policy can be used to pay for a funeral, pay an Inheritance Tax bill, or simply to provide a cash sum to family or a loved one.
About Trusts
A policy can be written into a Trust to ensure the value is paid directly to the beneficiaries, not your legal estate, which may have a significant tax advantage. It also allows greater control over who may spend the money and when.- More about Trusts
If a policy is placed in Trust, a claim can be paid more quickly.
If the policyholder dies and their plan is not in Trust, their personal representatives will need to obtain the appropriate Grant of Representation before they can deal with the policy. This process is known as Probate in England and Wales, and Confirmation in Scotland and can take several months. Until this happens the policyholder’s family could be suffering financial hardship.
By placing the policy in Trust, this can avoid the need for Probate or Confirmation, provided there is at least one surviving Trustee following the client’s death. As the Trustees are the legal owners they can deal with it immediately and make sure the funds are distributed immediately.
The key roles involved in a Trust:
The Settlor
The Settlor is the person who sets up the Trust, and in many cases is the life assured. They will appoint the Trustees and decide who the Beneficiaries will be.
The Trustees
The Trustees will manage the Trust fund on behalf of the Settlor and the Beneficiaries.
The Beneficiaries
The Beneficiaries will receive the Trust fund in line with the Settlor’s wishes.
If the policyholder dies and their plan is not in Trust, their personal representatives will need to obtain the appropriate Grant of Representation before they can deal with the policy. This process is known as Probate in England and Wales, and Confirmation in Scotland and can take several months. Until this happens the policyholder’s family could be suffering financial hardship.
By placing the policy in Trust, this can avoid the need for Probate or Confirmation, provided there is at least one surviving Trustee following the client’s death. As the Trustees are the legal owners they can deal with it immediately and make sure the funds are distributed immediately.
The key roles involved in a Trust:
The Settlor
The Settlor is the person who sets up the Trust, and in many cases is the life assured. They will appoint the Trustees and decide who the Beneficiaries will be.
The Trustees
The Trustees will manage the Trust fund on behalf of the Settlor and the Beneficiaries.
The Beneficiaries
The Beneficiaries will receive the Trust fund in line with the Settlor’s wishes.
Providing funeral cover
The average cost of a basic funeral in the UK is currently around £3,000, with experts saying that the average cost of dying (including the cost of a funeral, flowers, cars, probate etc) has increased to over £7,000.Taking out a Whole of Life assurance policy will ensure that your family and loved ones will have sufficient funds to cover these fees.
We check our pricing regularly. Here are the results of our research last done on 14 May 2012.
Level Term, £200,000 over 20 years,
non-smoker.
non-smoker.
Age 34
Age 34
Male
Female
Payingtoomuch.com
£9.97
£8.07
comparethemarket.com
£10.64
£8.61
gocompare.com
£10.64
£8.61
confused.com
£10.68
£8.65
More Th>n
£10.88
£8.81
ASDA
£11.78
£9.48
Sainsburys
£11.78
£9.79
Tesco Bank
£14.15
£12.47
TheAA.com
£15.17
£12.22
About payingtoomuch.com
We compare features, not just premiums
Our results table clearly shows the monthly premiums from up to 10 insurers all at once. Policy differences are highlighted using ticks and crosses against additional features such as whether the policy provides cover during the application process, pays out early in the event of a terminal illness, or provides additional benefits such as bereavement counselling as part of the policy.We work with the UK's top insurers to get you a great deal
We work with top insurers such as Aviva, Legal & General and LV= to provide discounted rates that some of our competitors don't provide. For more information about our pricing, see "Why are we so competitive?"We compare Critical Illness "extras"
If the Critical Illness option is selected the results screen digs deep into the small print to help you understand what “core conditions” are covered and importantly what extra pay-outs may be made on top of the core conditions. Extra pay-outs can be made for conditions that aren’t quite as life threatening like low grade prostate cancer, breast cancer and coronary angioplasty (although these conditions feel serious to those that go through them). It’s only by comparing the policy features in a transparent way that these important extras can be assessed against value for money.Once you've compared, you can buy your policy online through our website
Once you've compared prices and features and found the right policy for you, you can fill in the rest of your details including any medical questions on our website. We'll then set the policy up on your behalf, so you don't even need to leave our website. If you'd prefer, we can pick up your application on the phone, so you can apply without sending your bank details across the internet.30 Day money back guarantee
You can cancel your application at any time up to 30 days after the policy has started and get a full money back guarantee. So you can apply and start a life insurance in the full knowledge that if you change your mind at any time you can withdraw from the transaction and get a full refund of any premiums paid.Peace of mind
We can provide you with peace of mind. You can search all the options, select the one that suits your budget and circumstances and complete your application online or by phone.Once you are covered you can rest assured that your dependants are well protected giving you that valuable peace of mind. Should you no longer require the cover at any time in the future you can simply stop paying the premiums and the cover will cease, no questions asked and without penalty.