Life
Insurance
Life Assurance provides a lump sum in the event of Death or terminal illness.
Life insurance provide a lump sum, paid tax free, to your dependents in the event of your death. Life insurance can also be known as term insurance and there are two main ways in which the cover can be arranged:
1. Level Term Assurance
This type of policy is where the amount of cover, which is also known as the ‘sum assured’, remains at the same level thorough the length of the policy. This type of policy is often taken out to help pay off a mortgage and is most suited to interest only mortgages, where the amount owed does not decrease over time. For applicants with families, Level Term Assurance could be a great way to provide a lump sum for your family. The way this works is if you have a repayment mortgage, as the mortgage balance decreases, the difference between the sum assured and the mortgage balance can be used for family protection. The longer term the mortgage has run, the more family protection could be available.
2. Decreasing Term Assurance
This policy pays out a cash lump sum in the event of death, but the amount of money paid out decreases over time. These policies are the cheapest way to insure your life and are a good option when taken out alongside a repayment mortgage so that the amount paid out is the same, or close to the amount left on the mortgage.