Life Assurance
Life assurance allows you to make sure your family is protected in the event of your death, during the policy term. Our service will provide advice and recommendations on the appropriate type of policy, level of cover, and the term required based on your specific needs. Your premiums will never change (unless you change the amount of cover held under the policy or alter the plan), allowing you to budget with confidence.
The Financial Conduct Authority does not regulate trusts
Types of Cover
Because Life Assurance is such a varied and flexible product, it can come under many different names. Each generally describes the cover aims however some are simply interchangeable with Life Assurance:
Life Insurance
A general term used to mean the same as Life . The difference is that in the insurance world, they insure against something that might happen but they assure against something they know definitely will happen at some stage, i.e., death.
Mortgage Life Assurance / Mortgage Life Insurance
Mortgage Life Assurance is used to protect your mortgage against the risk of you dying and leaving it behind for your family to continue paying.
Mortgage Life Assurance is only suitable for mortgages which are Capital and Repayment because the level of cover is designed to reduce as your mortgage reduces over the years.
The reduction ensures that there is always enough in the 'pot' to pay off the mortgage if the worst happens but there will be very little surplus remaining.
Decreasing Life Assurance / Decreasing Life Insurance
Decreasing Life Assurance is a term used to mean the same as Mortgage Life Assurance. The 'decreasing' refers to the reduction in cover over the years.
Term Life Assurance / Term Life Insurance
Term Life Assurance is the opposite of Mortgage Life Assurance in that the amount of cover remains the same throughout the term of the policy and does not reduce. This type of Life Assurance is suitable for those people with Interest Only mortgages, those wishing to cover funeral expenses, and people wanting to leave a sum of money behind to ensure their family’s standard of living.
Level Life Assurance / Level Life Insurance
Level Life Assurance or Level Term Life Assurance is another term that is used to refer to Term Life Assurance.
Increasing Life Assurance / Increasing Life Insurance
Increasing Life Assurance is an extra option offered by most insurance companies that allows you to protect your Term Life Assurance policy from the effects of inflation. Each year you will be offered the opportunity to increase your amount of cover in line with the retail price index without any further need for medical information. You may also pick a different rate from 1-10%.
This allows your policy to retain its real value over the years so your family receives a payout of equivalent value in years to come.
Index Linked Life Assurance / Index Linked Life Insurance
Another term used to refer to the increasing life assurance option offered on term life assurance policies.
Critical Illness Cover
Critical illness cover is an important financial safety net. It's designed to to pay out a fixed cash amount if you're diagnosed with one of the critical illnesses covered in the individual insurer's policy.
Critical Illness Cover is designed to pay out in most circumstances including cancer, heart attack and stroke. However because of advances in medicine, not every type of cancer will have a severe impact on your lifestyle if discovered and treated early enough, for example, a cancer needs to have spread or reached a specified severity to be covered.
Reasons for Cover
Why do you need it?
The loss of a spouse or parent can leave dependants with additional issues to cope with other than the emotional. If you are inadequately insured, your dependents may be left with a dramatically reduced household income, which could affect their quality of life. Potentially there may be reduced opportunities for children such as the ability to pay for a university education or difficulties in maintaining mortgage payments on a reduced income.
In the event of your death, a lending institution will not write off your debt. Rather, they will continue to pursue the debt through your dependants and could, ultimately, foreclose on the loan meaning the loss of the family home.
What will the State provide?
The main benefits the State may provide are the Widowed Parent's Allowance and Child Benefit. Depending on whether the widow(er) qualifies for Income Support, the State may or may not help with paying the mortgage interest.
The method for calculating which benefits an individual may qualify for is extremely complicated. More information is available at the Department for Work and Pensions website www.dss.gov.uk.