Frequently Asked Questions
Do I have to have life cover if I have a mortgage?
Most Mortgage lenders will insist that you have cover in place before your mortgage completes. A life insurance policy to cover your mortgage will give you the peace of mind that, if you die, your family can clear the debt and avoid the risk of losing the family home.
I don’t have a mortgage, do I still need protection?
A mortgage is not the only thing in people’s lives that needs protecting. You should consider all aspects of your finances whether you have a mortgage or not and it is a good idea to regularly review the cover you have. Everyone’s needs and priorities are different but you might want to consider protecting your income should you be unable to work or are made redundant – you may also want to look at provision for your family should the worst happen. The important thing is not over insuring, but making sure that you are insured for the right things in the right way.
What is the difference between life insurance and serious illness?
Both policies provide a tax-free lump sum, but whilst life insurance will pay out should you die, a serious illness policy will pay out if you are diagnosed with a serious illness. In both cases, the money can be used for whatever you like; it could be used to pay off your mortgage or other debts, to replace lost income, or to pay for private medical treatments.
Life assurance or life insurance – what’s the difference?
Nothing, they’re two names that describe the same thing – a policy that pays out a set amount if you were to die before the end of the policy term (also referred to as term assurance). Technically speaking, insurance is a policy that will only pay out in certain circumstances, whereas assurance covers a guaranteed event.
How much cover should I have?
There is no set rule that says how much you should have – it really comes down to your circumstances and your budget. If you have a mortgage and a family, your needs will be very different to those of a single person who rents, but each person should consider protection of some sort, whether it’s for clearing debts, replacing income or looking after family. We recommend that you speak to one of our expert advisers for some free advice – they can make sure you have the right sort of cover to suit you.
What if I can’t afford it?
Some cover is always better than none at all. In an ideal world we would all have as much protection as we need, but unfortunately we do not have limitless budgets. If your budget it tight, our expert advisers can tailor a package of protection that works for you and your wallet.
If I cancel my current life insurance policy to replace it with a new cheaper one, will I have to pay a penalty?
Term assurance policies do not have a surrender value or impose penalties for cancellation. They will provide you with the cover set out under the terms of the policy, so long as you pay the premiums – if you stop paying the premiums, the cover will stop too.
If you are thinking of changing policies, make sure you are not reducing the quality of your cover – check that any new policy gives you the same amount of cover for the same period of time.
Are the premiums guaranteed?
If it’s a critical illness policy, are you covered for the same range of illnesses? If you are in doubt, speak to an adviser. If all that looks ok, then you can certainly switch to a cheaper policy, but make sure that you never cancel an existing policy before the new one is up and running.
I’ve had some medical problems in the past, is that going to rule me out?
Previous medical problems may well have an impact and what cover you can get and at what cost, but it is certainly something we can research further for you. Life insurance companies will typically charge higher premiums to people with certain illnesses or conditions, but how much they charge and for what can vary considerably, so it is always worth making sure you are with the right insurer for you. If this is something you would like help with, please give one of our protection specialists a call.
Do I have to do this now?
It is never a good idea to delay these things, when you have established you have a need for protection, the best thing to do is to get the cover in place as soon as possible as you never know what is around the corner.
Life insurance applications are bound to involve loads of forms and medicals aren’t they?
We believe that taking out life cover should be as painless as possible, so instead of leaving you to complete a 30-40 page form on your own, we will arrange a telephone interview with a member of our applications team to record all the details at a time that is convenient to you. There may well be the need for further information, but we will be on hand to help and to answer any queries you may have to make it as smooth a process as possible.