Types of Insurance
Insurance & Protection
Level term assurance:
This is a contract between an insurance company and an individual/s, where payment of a claim by the insurance company in return for premiums paid depends in some way on the duration of a human life or lives. This style of insurance policy has a set term, sum assured (amount of cover upon death) and a premium which can be guaranteed or reviewable. The sum assured remains level throughout the term of the policy but can be index linked to keep pace with inflation if required. This form of cover is usually used to make provision for a family or spouse in the event of your death, as well as protecting an interest only mortgage.
Decreasing term assurance:
This is a similar policy to the one described above, but has one main difference in that the cover decreases over the term of the policy by a set amount per annum. This makes the policy normally more competitively priced, and tends to be the traditional way to protect a repayment mortgage or loan.
Family Income Benefit:
The family income benefit is a long term life assurance policy which will pay out a regular tax-free income, upon your death, for the remainder of the policy term. Alternatively, your dependants have the option to convert the income payments to a single lump sum.
Critical illness cover:
Critical illness cover pays a tax-free lump sum if your diagnosed with a defined critical illness during the policy term. Critical illness cover is often available as a combined policy with term life assurance, and can be available in level, decreasing or family income benefit. Normally, in a combined policy if you qualify for a cash pay out after being diagnosed with a defined critical illness, the policy is effectively finished. This means there is usually no life assurance benefit to be paid out if you die at a later date. This is very popular cover due to statistics demonstrating we are so many more times likely to suffer a critical illness and survive it, than to actually die immediately from it.
Whole of life insurance:
This style of policy provides a life assurance contract for the duration of your life, as long as you continue to pay the required premiums. This means someone will definitely receive a pay out on your death, no matter when it happens. Therefore, this style of cover has no term as it provides cover for all of your life. The whole of life plan (WOL) can be used for Inheritance Tax (IHT) planning covering some or all of the potential tax liability on your death for both healthy and impaired lives. This style of insurance cover is normally more expensive than traditional level term assurance, and this is primarily down to the potential life of the applicant and the fact if premiums are maintained there will be a pay out in the future for the insurance provider.
In the event a whole of life policy may be required for IHT purposes, we will refer the client to a qualified Intrinsic Financial Advisor.
Business protection policies assist businesses to continue to run, following the death of a key person within the organisation, by helping to cover the expense of hiring and training replacement staff to continue with the smooth running of the business. It can also be used as a settlement to pay the deceased's spouse as they may be entitled to their share of the business, which otherwise could result in part of the business having to be sold to repay their share. It can be used in partnerships and limited companies, and normally is utilised to its full potential with a cross option agreement and business trust place into place. This type of cover can also incorporate critical illness or income protection for the key people to be covered.
* Income protection cover:
Income protection cover provides an income in the event of someone suffering an accident or illness, and this type of insurance will provide an income after an agreed deferred period and for either a short or long term period. The policy is designed to provide assistance to the policy holder who wants to protect their salary so they don't fall behind with monthly outgoings, should they be unable to work for the reasons described earlier. You can only protect an element of your annual income normally 65%, as the client cannot be better off than when working and the benefit is tax free.. As with other policies the policy holder agrees a policy term, benefit and deferred period at the outset of the policy and it must reflect their current income levels to qualify.
This benefit is similar to income protection but only provides cover should the policy holder lose their job, again it is designed to provide financial assistance to help pay your bills should such an event occur. The policy generally pays out a benefit for a fixed period of one to two years, or until the policy holder successfully returns to work. It is essential for clients with mortgages or other financial obligations which need to be met with regular monthly repayments.
At The Mortgage Advice Centre we are proud on providing you with the best professional advice and excellent customer service. We can find you the right product for your individual needs.
There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk
Whether you live in a house, cottage or flat you have probably considered cover for your contents, bricks or mortar. So what is home insurance and what does it cover? There are three main types of home insurance, buildings insurance, contents insurance and combined buildings and contents insurance. Building insurance covers the structure of your home, for example, your walls, windows and roof as well as permanent fixtures and fittings, such as baths, toilets and fitted kitchens, while contents insurance covers the possessions in your home. Combined buildings and contents cover, meanwhile, covers both. As well as covering you for theft, home insurance also protects you against damage caused by a number of unforeseen events including flooding, fire and explosions.
If you're worried about what you'd do without your valuable belongings, The Mortgage Advice Centre can advise you on how best to protect your home and its contents from loss and damage.
* There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk