Life and Critical Illness

Life cover pays out in the event of your death.  Critical illness cover pays out if you are diagnosed with one of a range of specified illnesses.  Life and critical illness cover combines these two forms of insurance into one policy.

Life cover can take the form of term insurance or whole-life cover.  Term insurance covers you for a specific period and only pays out if you die during that period.  Whole-life cover remains in force indefinitely and so, assuming you keep paying the premiums, it will pay out at some point.

If you want life cover specifically to pay off a mortgage in the event of your death, then you might want to look at a policy which offers decreasing cover.  The idea is that as your mortgage reduces so does the amount of cover you need.  Having a life insurance policy which supports this can work out more affordable than paying for more cover than you need and more convenient than having to update your cover regularly.

If, by contrast, your main aim is to provide for dependents in the event of your death, then you might want to look at a policy which pays an income for a specific term.

Whatever form of life insurance you choose, you might want to get advice on the possibility of writing it into a trust.  Using a trust allows you to keep some level of control over how the money is used (which can be useful for managing children’s inheritances).  It also separates the insurance payout from the rest of your estate.  This can help to reduce your IHT liability.

When looking at your need for insurance cover, remember to think about cover for home-makers too.  If anything happens to them, then you will need to pay someone else to do what they do and this can work out expensive.  You may even want to think about having cover for your children, especially critical illness cover.  This can be a great help if a child’s illness (or death) impacts your ability to work.

Please contact us to find out how we can help you to protect your loved ones.