Life Insurance & Critical Illness Cover

Life insurance is not compulsory so it is not something you must have but it is very important.  Responsible, mature people are more likely to have some form of cover.

Lots of websites are advertising life insurance from £5 per month, is this possible? – it is entirely possible for some people to get life insurance for £5 per month but the cost of life insurance depends on the age, smoker status and amount of cover. The younger you are and the less cover you have, the cheaper it will be.

Applicant 1:

Applicant 2 (if required):

Enquiries are passed to County Financial Advice who have experience helping people like you.

County Financial Advice is an Appointed Representative of New Leaf Distribution Ltd who are authorised and regulated by the Financial Conduct Authority Number 460421. Registered office 1st Floor Princess Caroline House, 1 High Street, Southend on Sea, Essex, SS1 1JE

Your details will be sent to a qualified, regulated adviser who can compare a wide range of leading life insurance providers including some of the best known life insurance companies in the UK such as Aviva, Vitality Life, Royal London, Aegon, LV, AIG, Zurich and more.

About Life Insurance & Critical Illness Cover:

Sadly we are all going to die and none of us knows when that will be.

It is possible to take steps to make sure the people left behind are taken care of financially.

Life insurance has been around for hundreds of years and is designed to do just that.

Life insurance can provide a cash lump sum or even an income to our next of kin if we die before we have been able to build up savings or pay off the mortgage.

Critical Illness Cover can provide a lump sum to the policy holder ‘on diagnosis’ of a critical illness covered by the policy. Insurance companies in the UK all cover a set number of illnesses as defined by the ABI (Association of British Insurers). Many also offer cover for a variety of additional illnesses and the scope of these additional illnesses varies from one insurer to the next with some offering far superior
‘definitions’ compared to others.

There are a number of ways life insurance can be set up depending on the precise needs of the person wanting the cover so it makes sense to talk it through with an expert.

Typically life insurance is put in place to protect a mortgage or provide financial assistance to the people left behind.

‘Level Term’ Life Insurance – Provides a fixed amount of cover for the entire term of the cover. For example, £100,000 of cover taken out at the start of the policy will always provide £100,000 of cover. People with an ‘interest only’ mortgage should consider this type of cover.

By having level cover with a repayment mortgage, although the mortgage will go down, the amount of cover would remain the same and so a surplus of cover would be built up over time.

‘Decreasing Term’ Life Insurance – Provides a decreasing amount of cover. This is usually cheaper than ‘level’ cover and the amount of cover goes down in line with a repayment mortgage so there is only enough to clear the mortgage. In some cases, such as a sharp increase in mortgage rates, there may not be sufficient cover to clear the mortgage entirely.

‘Index Linked’ Life Insurance – Provides cover which can increase or decrease in line with inflation.

‘Family Income Benefit’ – Provides an income to your next of kin for the remaining term of the cover. For example, if cover is taken out over a 25 year term and the policy holder dies in year 5, the ‘Income’ will be provided for the remaining 20 years. It is worth having this cover on an ‘Index Linked’ basis because an income of £15,000 may not buy as much in 10 years time as it will now.

What Affects the Price of Life Insurance & Critical Illness Cover?

Age – the younger the applicant, the cheaper the life insurance. It is possible to have a life insurance policy that runs up to age 85 but most insurers have a maximum term of 40 years so if someone wants
life insurance to the maximum age of 85, they will need to take out cover or renew their cover at age 45. Alternatively Whole of Life cover will run for the whole of the life of the policy holder provided the monthly premiums are paid.

Occupation – can make a difference to the cost of life insurance. Certain pilots and deep sea divers may be charged more for cover because of the increased risk involved on their day to day activities. Certain
occupations within the building trade such as scaffolders and roofers may also be considered higher risk compared to office workers and so be charged more for life cover .

Weight – people who are overweight may need to pay more for life cover because excess weight can increase the risk of health problems in later life.

Existing Medical Conditions – If you suffer from or have suffered from a serious illness the likelihood is life insurance will cost more or be ‘loaded’. In this instance it is always worth talking to an in
dependant insurance adviser because insurance companies treat illnesses differently and an adviser can help find the most competitive price.

Family Medical History – If direct relatives such as parents and brothers and sisters have suffered from serious illnesses and there is a chance the illnesses are hereditary then life insurance may cost more.

Why Have Life Insurance?

Life Insurance is not compulsory. In fact the only type of insurance that is compulsory by law is car insurance.

Mortgage lenders will require a borrower to have buildings insurance but it’s not even essential to have contents cover.

Life insurance is however always a good idea and certainly more important than having contents insurance for your possessions.

It’s down to the individual to put a price on the value of having life insurance and this can be determined by a number of things.

For example, a single person with no children may not think it’s important (even though it’s always a  good idea) but they may like the idea of leaving something to their parents if they die young.

If you have children and would like to leave them something if you die or you would like to know they would be given a financial helping hand if anything happened to you or your partner then life insurance is one way to achieve this.

Another way to leave something for your children is by starting a savings fund for them. A life insurance policy will provide protection as soon as the policy starts and for as long as the policy is in place while a savings plan will provide funds for the future.

For example, £20 put into a savings account every month will be £240 by the end of a year so if you die in a year from the time you start saving there will be £240 for your family. If you take out life insurance
and are able to get £100,000 of cover for £20 per month and die within a year of starting the policy then there will be £100,000 for your family.

Protecting a mortgage is often the main reason people take out life insurance so that if they die during the term of the mortgage the mortgage can be paid off and their family can stay in their home and not have to struggle to pay the bills without the income of the deceased.

Term assurance, which is what most people have, will only provide cover for the ‘term’ of the policy. A 25 year policy will provide protection for 25 years and after that time the policy will end and the cover will stop.

Whole of life insurance will provide cover for the ‘whole’ of someone’s life but it is more expensive. The reason for this is because the insurance company will definitely end up paying out provided the policy is kept in place.

With a Term Assurance policy the policy holder may well still be alive when the policy ends (there is a good chance a 20 year old will still be alive in 25 years) so the insurance company may not have to pay out during the term.

Life insurance is not very cheerful in reality which is why many people shy away from the subject and don’t have any.