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We know that your family means the world to you, and that you want to do everything in your power to keep them safe when you’re no longer here to protect them yourself. Life Insurance can help give your family financial protection should you pass away within the policy term, leaving behind a lump sum that helps loved ones maintain their living standards or pay mortgage costs. Along with paying for bills, school fees and other debts, your Life Insurance policy can give your family and noted benefactors one less thing to worry about when the time comes.
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What Is Life Insurance?
Life Insurance allows you to leave behind money for your family when you die, which can be used to support them, to replace lost income or to pay off debts such as your mortgage. Because the policy relates to your health, when you apply for a Life Insurance policy, you’ll have to answer some questions about your health and lifestyle, honestly and accurately*, with factors such as your age, how much cover you need, as well as the type of policy you have, all determining how much you need to pay for cover.
When it comes to this policy, the most common type is term life insurance. This is where you choose the amount you want to be insured for and the period for which you want cover. If you die within the term, the policy pays out to your beneficiaries. There are three main types of term insurance to consider, and these include:
Level Term Insurance: Pays out a lump sum if you die within the specified term. The amount you’re covered for remains level throughout the term.
Decreasing Term Life Insurance: The amount you’re covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgage.
Increasing Term: The amount you’re covered for increases over the term of the policy, to keep up with inflation.
Avail can help you find a suitable insurance policy, and will even write the policy into trust for you, so that your loved ones don’t potentially lose 40% of the money paid out by the insurer. This helps mitigate Inheritance Tax Liability*, ensuring your beneficiaries receive the proceeds from the policy.
How Does Life Insurance Work?
As we’ve touched on, Life Insurance can protect your loved ones from economic hardship after your death. But, how does Life Insurance work in practice? Well, like many insurance policies such as Income Protection Insurance, Home Insurance or Over 50’s Life Insurance, there are monthly payments involved and then upon your death, a lump sum is paid out to your loved ones.
Broadly speaking, Life Insurance usually only covers death and cannot provide for your family because of illness or disability. However, some policy terms include what is known as ‘Terminal Illness Cover’, which will payout the aforementioned lump sum if you’re diagnosed with a terminal illness* and aren’t expected to live longer than 12 months.
It’s important to bear in mind that there are some illnesses that Life Insurance won’t cover. For instance, a life insurance policy won’t cover you if you die because of drugs and/or alcohol abuse because it is considered self-inflicted and you were aware of what you were doing at the time.
The Types Of Life Insurance
We have briefly touched on the types of Life Insurance above, but in this section, we’ll detail them further, so you have a better idea about the sorts of policies that would suit your income level as well as other personal circumstances.
Whole of Life Cover
No matter when you die, the whole of life cover will pay your dependents a lump sum. This is different from other policies which will only payout if you die before a specified date. These types of policies tend to be more expensive because they will pay out whenever you die* as opposed to a predetermined date range.
This policy will pay out to loved ones if you die within a specific period. A limited Life Insurance policy such as this means that costs tend to be lower because the policy has a fixed date to it*. A lot of people will take out term insurance so that their loved ones can cover mortgage repayments or other housing costs.
Decreasing Term Life Insurance
Sometimes referred to as, ‘Mortgage Life Insurance’. Decreasing term insurance will reduce the potential payout year after year. People will take this out to pay for mortgages knowing that, over time, the debts accrued are likely to fall as more is paid off. Like term insurance, decreasing term insurance will have lower premiums because the overall value of the policy reduces.
Increasing Term Insurance
The complete opposite to decreasing term insurance. Increasing term insurance is where a Life Insurance policy increases in value each year*. Most people opt for this policy to reflect rising inflation and to ensure their lump sum will retain value later in life and not stay as a fixed amount. For example, their £10,000 payout may not be worth the same in 15 years, and this kind of policy will remedy that issue.
Renewable Term Insurance
This policy provides someone with Life Insurance cover for a fixed period but, at the end of that period, it can be renewed without having to go through the process of medical checks.
Joint Life Insurance
Often called, ‘Couples Life Insurance’. As indicated by the name, this policy is popular among couples because it covers one member of the partnership if the other were to die. This policy is often cheaper than two individual policies, but the cover pays out and stops after the first person has died.
As well as a selection of Life Insurance policies, here at Avail, we offer a range of other products related to life insurance like critical illness cover and private medical insurance. Our team can also help you with wills & funeral planning, via referral to a third party.
Life Insurance With Pre Existing Conditions
Here at Avail, we understand that if you have any kind of pre-existing condition you’re going to want to know whether you’re still eligible for insurance cover. If you are, you’re going to want to start paying into a policy straight away so you can look after your loved ones.
A pre-existing condition is defined as, ‘’a health problem, like asthma, diabetes, or cancer, you had before the date that new health coverage starts.’’.*
Example of pre-existing conditions include the following:
- Mental Illness
- Heart Conditions
These are just typical examples of conditions, there are hundreds of pre-existing illnesses that people may have. When applying for Life Insurance, you’ll need to detail your full medical history and the name and information about your specific condition.
With this information, our team will work with you to find the most suitable Life Insurance policy for you. We’ll be on hand to offer guidance and advice about our range of policies and how they can benefit you.
Get In Touch
Unsure which Life Insurance policy is right for you? Want to learn more about the types of Life Insurance from brokers you can trust? For trusted advice and guided support, please get in touch with Avail today. Serving clients in areas including Leeds, Huddersfield, Sheffield, York as well as the rest of the UK, we’ll help you find the most suitable quote and policy for you.