Protection Insurance
:: Life Insurance Glossary
Life Insurance Glossary
Life Protection
"Term Assurance" or "Level Life Insurance"
is an insurance plan that pays out a guaranteed cash sum if you
die during the term of the plan. Some Term Assurance Plans also
pay out if you are diagnosed as suffering from a terminal illness.
You can take out the plan on your own or with someone else.
For joint life policies the cash sum is normally payable only
once, on the first claim.
Mortgage Protection
"Mortgage Life Insurance" or "Repayment Mortgage
Protection" is an insurance plan to cover your whole repayment
mortgage, or just part of it.
Your insurance plan will pay out a cash sum to meet the reducing
liability of a repayment mortgage.
You can take out the plan on your own or with someone else.
For joint policies the cash sum is normally payable only once,
on the first claim.
Critical Illness Cover
"Critical Illness Cover" is an insurance plan that
pays out a guaranteed cash sum if you're diagnosed as suffering
from a critical illness covered by the plan. There is no payment
if you die.
You can take out the plan on your own or with someone else.
For joint policies the cash sum is normally payable only once,
on the first claim.
Income Protection
Long term State Incapacity Benefit is currently £69.75
per week!
For someone earning £25K per annum, this represents an
85% drop in income.
This insurance provides you with a regular tax free income
if, by reason of sickness or accident, you are unable to work,
resulting in a loss of earnings.
Those who should consider this kind of protection are:
Employed individuals without occupational provision yet with
a need to protect their family.
The Self Employed with more immediate needs - if they cannot
work they do not get paid. This type of cover does not provide
protection in the event of redundancy.
Waiver of Premium
A valuable extra which, if you are unable to work through illness
or accident for a number of months, will ensure your cover continues
without you having to pay the policy premiums.
Trusts
Many insurance companies supply free trust documents when arranging
your policy. Placing your policy in trust usually speeds up
payment of proceeds to your beneficiaries and also may assist
with Inheritance Tax planning.
Reviewable Premiums
Plans with reviewable premiums are usually cheaper initially,
however, the premiums are reviewed regularly and can increase
substantially.
Indexation
You can arrange for your insurance benefit and premiums to increase
annually in line with inflation or at a fixed percentage.
Pension Linked
If you are eligible for a personal pension, you may save money
by obtaining tax relief on your life insurance premiums - special
plans allow you to do this.
Terminal Illness
Some life policies include this benefit free of charge and this
means the life insurance benefit will be paid early if you suffer
a terminal illness.
Guaranteed Premiums
This means the premiums are guaranteed to remain the same for
the duration of the plan, unless you increase the amount of
cover via 'indexation'.
Whole Of Life
Unlike Term Assurance, Whole of Life policies provide life assurance
protection for the life of the assured individual(s). Cover
may either be provided for a fixed sum assured on premium terms
established at outset or flexible terms are available which
permit increases in cover once the policy is in force, within
certain pre-set limits, to reflect changing personal circumstances.
Critical Illness
Life Assurance provides lump sum protection in the event of
death. Critical illness policies provide lump sum protection
against diagnosis of one of a range of defined, survivable illnesses,
e.g.: a heart attack.
If provided alongside Permanent Health Insurance, Critical
Illness cover offers valuable additional protection, reducing
the impact of lost future earnings and additional expenses,
such as home modification, which often follow a serious illness.
