Referred to as ‘life cover’ or ‘life assurance cover’ this is a policy that pays out a lump sum if death occurs during the term of the plan. You pay premiums to the insurance company in return for being covered for the ‘sum assured’, which is the amount that will be paid out on death.
The cost of life insurance will vary depending on the size of the ‘sum assured’, your age, occupation, health, whether you smoke and the term of the policy. The policy can be arranged as:
- Level term assurance – the benefit assured remains the same through the term of the policy
- Decreasing term assurance – the benefit assured reduces during the term of the policy. This policy is typically taken out to cover the outstanding capital on a repayment mortgage.
- Family income benefit – Designed to pay out a regular monthly or annual benefit as opposed to a single lump sum in the event of death during the policy term.
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