Fundamental protection

Life cover provides a number of benefits and protects fundamental aspects of everyday life. This is a highly competitive market and products can now offer additional benefits such as a Critical Illness element. So if you need life cover or haven’t reviewed your existing arrangement for some time, now would be a good time to take a look at what is available.

The basics

Life cover can be used for a number of purposes, mainly to repay a mortgage or protect your family.

In the context of your mortgage, funds will be released upon death to ensure the mortgage is paid. This obviously benefits any dependents so they do not have the financial worry of trying to replace your income, and also the lender who knows that the loan will be repaid in full.

Life cover can also be used for family protection to simply provide financial support for dependents following your death. You may want to set this up in line with a key date in mind such as when your youngest child may realistically no longer require financial support.

The tools

Life cover, whether for mortgage or family protection, comes in a number of guises depending on what you want it to do.

Reducing life cover simply tracks your capital repayment mortgage, so as your mortgage reduces over the years so does your life cover, which keeps premiums lower.

Level term can be used to protect both your family and mortgage. In the instance of family protection it simply represents a lower cost alternative to increasing term, although best advice may suggest increasing term to keep your sum insured in line with inflation. For mortgage protection it would only really apply to interest only mortgages where the loan amount will be constant over the duration of its term.

Increasing term is normally utilised for family protection and essentially represents best advice on the basis that the sum insured is index linked. Therefore upon your death your dependents will be better protected than if you had taken out level term, although the cost of premiums does reflect this.

If you would like to discuss your requirements with one of our Independent Financial Advisers then please click here, complete the enquiry form, and we will contact you to assess your circumstances, review the market place and then present options for you to consider.