Family Protection
Protecting your home, your family and your dependants
Life insurance is about providing some financial security for people who depend on you if you died. (So if you don't have a partner, spouse or civil partner, children, or other dependants, you may not need life cover.)
To make sure you buy the right amount of cover, with the right terms and conditions, you should consider getting some advice. For more information please contact us on 0800 028 60 70. The advisor assesses what your family would need and will only make a recommendation that is affordable to you.
Always answer questions as best you can and disclose any existing medical conditions when asked. If you don't give the full facts, you could invalidate your policy and the insurance company won't pay out.
Please review our pages on the website under Mortgage Protection regarding the different types of cover available to protect your home, your family and your dependants.
Mortgage Term Assurance
This is the simplest and cheapest type of life insurance, and is known as term insurance because you choose how long you're covered for, say, 10, 15, or 20 years (the term).
Term insurance only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out if either of you die during the term.
Things to look out for
- What type of policy do you want? For example,
- family income benefit (a policy which pays out income rather than a lump sum),
- increasing policy (where cover and premium rise over the years),
- decreasing policy (where cover and premium fall over the years),
- renewable policies (which let you extend the original term).
- Check for exclusions - in other words, when the policy won't pay out. For example, most do not cover death due to alcohol or drug abuse. You might not be covered while taking part in risky sports. If your health is poor when the policy starts, some causes of death might be excluded or you might be refused cover altogether.
- Premiums shown are usually fixed for the whole term. There are also contracts where premiums are reviewable after a certain period, usually five years.
- How flexible is the contract? Can you reduce or increase cover easily as your circumstances change? Are there extra charges for doing this? Does cover stop immediately if you miss a payment or is there a period of grace?
- By paying extra, you can usually include a waiver of premium. It pays the premiums if you can't work because of a long-term illness so that your cover is not interrupted.
- The policy can be set up under trust. This means that in the event of death, proceeds of the policy are paid directly to dependants of your choice. Provided a trust is set up properly, there may be benefits to doing this. However, using a trust may not be suitable for everyone and because of the complexities we recommend you seek financial and legal advice. Contact us for more information.
What does it cost?
This depends on several factors, such as the amount of cover you want and the length of the term. Naturally, it's also based on the likelihood of your insurer having to pay out: if you're a smoker and do a dangerous job, you'll pay more than a non-smoking office worker. Term life cover also costs more for men because, on average, they don't live as long. Always compare what's covered by a policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection.
Source: FSA Last Updated March 2009
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