What do you need to know about Life Cover?
Life cover provides a pay out when the insured person passes away. It is the only financial product which we do not benefit from personally, in turn, it is aimed at providing security for our loved ones. People who should think about this type of cover are:
- mortgage or business loan holders
- people living in marital or partner relationships
- those who are financially responsible for other family members, children or relatives
- owners of assets exceeding the amount exempt from IHT
Monthly premium may start as low as £5 which can make life cover one of the cheapest product we offer. The most popular type is Term Assurance. It means that you are covered for a specific period of time, for example, until the age of 80 or for 30 years. This is usually protection for the term of your mortgage, or up until your children reach adulthood. We also have whole-of-life policies in our offer, which means that the policy will pay out no matter how long we live for.
A good idea is to think about getting insurance at a young age, because you are asked about your medical history at the time of talking out a policy. If you have suffered from certain diseases, these can have an impact on your premium. Age is also one of the most important factors which determine the price of this product.
The proceeds from a policy pay-out can be used for:
- paying off your mortgage
- your child trust fund, to finance their education or provide them with a stable start into adulthood
- provide care for the elderly, like your parents or grandparents
- help with daily living costs when your spouse or partner passes away
Exception to the rule
There is an exception to every rule. The only possibility of receiving a pay-out from a life cover policy during your life is a terminal illness diagnosis. This means that your doctor gives you less than 12 months to live. The diagnosis is often given to people suffering from incurable diseases.
What if you are not going to be this exception and you will not receive this money during your life? What happens then? Who in this case in eligible to receive the policy proceeds? If the policy is part of our estate and you have not made a Will, the standard inheritance rules apply. In order to exclude the policy from your estate and select a person who will receive the money, you have to place the policy into a Trust. You can find more about the advantages of having your policy in a Trust (including tax planning) on our next blog post and our Facebook page.
Get in touch for more information and personalised advice.
Renata Orczyk Martyna Orczyk
Director & Founder Administrative Manager
Clover – Family Cover Ltd Clover – Family Cover Ltd
Tel. 07858282317 Tel. 07522345476