In Retirement Services

Sound Financial Advice

Life cover or life insurance should be a part of one’s financial planning for their future. This insurance product will cover anyone who has dependents or beneficiaries who may suffer financially from the policy holder’s death. Life cover is provided in several forms. The main goal is to pay out a specific, agreed upon amount to the beneficiary in the event of the policy holder’s death. The payment can be made in lump sum or regular income depending on the type of product. Life insurance is particularly important if the policy holder is the main income provider for their household. It is also beneficial for those with a partner and children.

What does it cover?
Life insurance will cover funeral expenses, inheritance tax planning, Interest-only mortgages, and beneficiary’s financial interests. It can also extend to business, whereby keyman insurance or share protection can be provided for. The main liability that life insurance covers is a residential mortgage whereby should one of the mortgagors die or have a critical illness before the end of the term, then the mortgage should be repaid in full.

For a time the lump sum or income payments can help a partner or beneficiary with their expenses and costs associated with the policy holder’s death. Funeral expenses are on the rise. While it is a subject many do not want to face, it is nevertheless an aspect one must face. Accidents, sudden death, and illnesses happen and it is better to provide proper cover for beneficiaries left behind than add to their burdens.

Types of Cover
There are three main types of life cover:
Whole Life
Level Term Assurance
Decreasing Term Assurance

Each life insurance policy has different benefits and features that attract consumers.

Whole Life assurance has no end date. Policy holders continue to pay premiums until their death. At death the policy pays out the agreed upon amount. Some policies available on the market will end premium payments at 85 or another advanced age limit, while the funds are still paid out at death. Since payout is certain the premiums are higher and the cover has more complicated terms such as the premium going into an investment fund, while another portion is used to buy life cover. The amount received by beneficiaries is dependent on the investment fund amount. Whole life is meant more for financial and tax planning versus sudden or premature loss of an individual.

Term Assurance is based on two types: level and decreasing. Level term assurance will keep the life insurance payout the same over time. Some policies increase or decreasing based on inflation or other measures like an interest-only mortgage or capital & interest mortgage. There is a preset amount that does not change as long as the premiums are paid. As a term policy the premium must continue. If payments cease, the policy will end even if payments were made for 25 years.

Decreasing term assurance will decrease in premium payment amount over the years, as well as the awarded amount to beneficiaries. This product is used for mortgage holders. The assumption is the mortgage is decreasing with payments made each month; therefore, there is less to cover at the end of the policy holder’s life. It is designed to cover any outstanding mortgage and funeral expenses rather than provide steady income to the beneficiary. It only remains intact if the premium is paid each month or payment period set up by the life cover company.