Life cover

Life cover Whether you are looking to protect your mortgage, life or income, we are here to advise you of the best way to keep the cost down and provide you with the very best product to suit your needs.

We will listen to you and provide you with the best advice on the full range of solutions available. You may have existing polices that need updating, or you may have forgotten what they actually do for you; again we can help you review your situation and refresh your memory. The world is constantly changing and you may need more cover or different types of cover as your family or work situation changes. Make sure you keep up to date as it is vitally important that you consider protecting yourself and your family. We will also help set up trusts and plan for Inheritance Tax issues if required. Because we are totally independent and deal with the whole of the market, we can talk about all of these areas for you and your family.

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More information on Life cover >

More information on Life cover

The need for life cover
While marriage may mean never having to say you're sorry, it's also expensive - it's considered only polite to make some sort of financial provision for your partner in case you die.

Although dual-income couples are now the rule rather than the exception, one partner is usually financially dependent on the other to some degree, and there will usually be debts such as a mortgage which it would be difficult for one partner to pay for alone. The need for life cover obviously increases even further once you have children.

More cheeringly, taking out life cover can often be a strangely reassuring business - if you look at all the premiums payable on the policy versus the amount it pays out you can see that the insurer is usually offering long odds against you dying before it ends.

Covering debts
Most people who need life cover have two separate requirements.

The first is to cover specific expenditure (including debts) in the event of death. The obvious example is a mortgage, or replacing an income. More generally, most people also feel a need to provide an extra something over and above this specific expenditure.

There are several different forms of life assurance to cater for different needs: cover which decreases over time, cover which increases over time, cover against inheritance tax liability, cover which is guaranteed to be renewable.

If you have an interest-only mortgage you need a "level" policy which pays out the same amount (i.e. the original loan) at any time during the mortgage term. If you have a repayment mortgage then you need cheaper "decreasing" or "mortgage protection" cover, since the amount you owe the lender decreases during the mortgage.

If you have a pension scheme it will usually pay out either a lump sum or an income, or both, to your partner if you die before retirement age. Find out how much. This can be topped up with a Family Income Benefit policy which pays out an income rather than a lump sum if you die before the end of the term.

The bottom line is the old saying "You can never have enough life cover". It's not entirely true, but it's always worth thinking about.

How much cover do I need?
This is a fraught question, to which there is no simple answer other than the adage that "you can never have too much life cover".

We suggest that you contact us to discuss your requirements, but the following is a rough guideline.

Firstly, make sure that all debts of any significant size are properly and separately covered. The main and obvious example is a mortgage.

Secondly, most employers who provide life cover as a benefit for their employees arrange it on the basis of 4 times gross salary - in other words, if you die your dependents will receive a lump sum equivalent to four years' earnings.

Please note that these guidelines really are only generic. Depending on your circumstances it may be appropriate to have more or less cover, or to take out a policy which will pay your dependents an income rather than a lump sum.

Getting some money back
It can be strangely galling to pay for life cover for 20 years and still be alive at the end of it. Where did all the money go?

For this reason insurers offer various sorts of "hybrid" product which have an investment element. Not only do they pay your dependents money if you die, but there is also a cash-in value at (or even before) the end of the policy.

The main example is a Whole of Life policy which provides life cover for an indefinite period. Each month you pay premiums which are invested in a fund, rather than simply buying insurance. The policy can either be set up so that the maximum possible amount of the fund is devoted to providing life cover, or to providing a cash-in value ("minimum" cover). If you go for the former (maximum cover, minimum cash-in value) you will need to increase the premiums as you get older to maintain the same level of life cover.

Whole of Life policies can also be written on a "standard" basis. This means that a cash-in value is accumulated, and that the premiums on the policy will not need to be increased for the chosen level of life cover provided that the investment fund reaches certain growth targets.

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