Updated 13 March 2018
In these current times of austerity who wants or needs to pay out yet another monthly premium especially on something like insurance we will never spend!
Life cover pays a lump sum upon death or diagnosis of a terminal illness. It can be taken out for a fixed term or the whole of your life and can cover single lives or joint lives either on 1st death or second.
Term Assurance generally relates to covering a set term where a debt is being repaid, for example a mortgage. A lump sum payment can mean the mortgage is paid off at a very difficult time for a surviving spouse. However I constantly come across married couples with a new mortgage or baby who have not thought of the terrible financial consequences death would bring. Policies can be placed in trust to assist with prompt payment to the correct beneficiaries and to avoid probate delays.
Recently it would seem that term assurance has become very competitively priced and should not be too costly unless you smoke or have a serious health history.
Whole of life plans can be written on single and joint lives as well. These are often used for IHT purposes so that the last survivor’s death triggers a lump sum to meet the Tax bill. Once again the plan should be in trust so as not to form part of any estate. There are many permutations of such policies such as indexed benefits, guaranteed premiums throughout life and reviewable premiums, after say ten years.
Life companies make their money by judging mortality tables, charging accordingly and hoping clients cease the premiums prematurely in later life therefore avoiding all risk but having received large sums during the period of cover.
There are further types of protection, including property insurance, that fit all number of circumstances but too many for this column today, however what is important today is checking the protection currently in place and considering the problem of no financial compensation. Most people insure their car, house contents, holiday, carpets and so on but what is the most valuable thing in your house?