Insurances We Specialize In …
Life insurance
If you have a family, life insurance can give you peace of mind that they will be looked after in the tragic event of your death. None of us like to think about it, but understanding how this type of insurance works could save you money.
The options
You should first look at term insurance. This temporary form of life insurance is offered by most insurance companies, a number of friendly societies and other financial providers.
It's based on a simple concept - the insurer guarantees to pay the policy benefits if you die within a given time. If you survive to the end of the policy's term, no benefit will be paid.
The term of the policy depends upon you and may be anything from a few years to several decades but it should coincide with your need for protection. Policies may be written on your life or on the life of yourself and your partner. Term insurance is the least expensive form of life cover. Be aware that premiums for men tend to be higher because on average they do not live as long as women. Premiums for smokers are more expensive.
Type of ‘term’ policy
There are varying versions of term insurance. With a level term policy the benefit is paid on death and remains the same throughout the term. At the end of the term the policy has no value and simply expires.
Convertible term insurance may be converted into permanent cover when your original policy's term comes to an end, usually by buying whole-of-life insurance or an endowment policy. Its main attraction is that you cannot be refused the right to take out the new policy no matter what the state of your health.
However, there are a number of rules governing conversion. Firstly, you cannot increase the sum assured when you convert - it is restricted to the amount on the original policy. Secondly, you must convert before your term insurance ends. Thirdly, though you cannot be refused conversion, the new premiums you pay will be determined by your age and sex – but not your state of health – which means they will inevitably rise.
Finally, conversion comes at a price and it tends to be 10% more expensive than basic level term insurance.
A renewable term lets exchange it for another policy at the end of the term. The big attraction is that you have guaranteed insurability - you will be insured irrespective of your state of health when you come to renew. Renewable term insurance is often offered as an option on convertible term policies and vice versa.
Increasing term policies increase the payout, typically by 5% or 10% a year. This costs more than level term insurance, but your benefits are protected against the ravages of inflation. The right to increase the sum assured usually ends when you reach 65.
Family income benefit is paid on a regular basis from the death of the policyholder to the expiry of the policy's term. Policies are usually written on a joint basis which means income payments are made as soon as one partner dies.
Mortgage Protection
An MPPI policy pays your mortgage for you if you become unable to work for an extended period of time, as a result of redundancy, accident, sickness or disability. There are also other payment protection policies that can be obtained to cover credit card or loan repayments. If there is a reasonable chance you will find yourself out of work in the future, then this sort of policy can provide you with valuable financial assistance.
An MPPI policy should provide enough income to cover all your monthly mortgage expenses. If you have a repayment mortgage, this should be your capital and interest repayment and if you have an interest-only mortgage, the MPPI should cover your interest payment as well as your normal monthly contribution to the investment vehicle that will repay your loan.
There is usually a deferral period - a length of time after you are unable to work or make the claim before you can start to receive insurance payouts. Typically this ranges from 30 to 60 days, though for non-mortgage related products, the deferral period can be as long as 90 or even 120 days.
Critical Illness Cover
No one likes to think about the possibility of suffering a serious critical illness but if it were to happen to you, the consequences would be devastating for the financial security for you, your family and all of your futures.
How would they cope? How would you pay your bills and clear your debts if a critical illness happened to you now? If you couldn't work due to your illness, would you need to make alterations to your home? Would you need to hire in help? Would a serious illness prevent you from being able to pay the bank or building society for your loan or mortgage? If so, what would happen to the standard of life that you have worked so hard to achieve?
