Help Centre
- How To Choose A Plan Which Is Best For You
- Trusts
How to Choose A Plan Which Is Best For You:
What Do You Want The Plan To Do?
:: Repay a mortgage or loan on your death
If the mortgage is a Repayment one (Capital & Interest) then a Mortgage decreasing term assurance plan (mortgage protection plan) should be considered. This is designed to pay off the debt, and therefore the amount of cover decreases in line with the outstanding loan. If the mortgage is Interest only (e.g. an Endowment or ISA Style) then a Level Term Assurance plan is appropriate. The level of the cover remains the same throughout the term because the loan remains the same. Please note term assurance plans do not accrue any cash in value. They only pay out on death.
Critical illness insurance can be added to the above plans if you wish for a more comprehensive cover or this can also be bought as a standalone plan. Please see the Life Assurance page for further information.
:: To provide money to your family /dependents on your death
If you wish to leave a lump sum to your dependents after your death then a Level Term Assurance plan is appropriate. A cheaper alternative to this is Family Income Benefit. Instead of a lump sum this plan provides an agreed monthly or annual income after your death. This would usually be designed to run for the number of years it would take for your child to become independent. (See other products)
The Application Process:
After obtaining a quote on the website just click apply. We will then contact you to begin the next stage of the process, whereby we will check to ensure that the product you are interested in is right for you, and confirm this to you in writing.
Please note that when you are reviewing the premium rates, the following situations may trigger the insurance company underwriters to ask for further information and/or write to your doctor for further information.
> Medical Issues
> Family medical history
> Foreign travel other than for holidays
> Hazardous pursuits (eg rock climbing, flying)
> Particularly high sum assured being applied for
> Risky or unusual occupation
The above list of situations is not exhaustive, but is generally the main areas of concern for insurance companies. Depending on the responses given to the above cover may still be offered at the same prices as that quoted, cover may be offered at a higher price or in extreme conditions cover may be declined.
How Much Cover?
This will depend on the reason for taking out life cover. If it is to cover a mortgage and/or loans then the amount of the outstanding debt will need to be covered until the debt repayment period ends. Is your mortgage a Repayment one?
If so you need a Decreasing Term Assurance policy. If it is an Interest only mortgage (e.g. an endowment or ISA style mortgage) then you will need a Level Term Assurance policy. If you are considering life cover to protect your family then a common level of cover recommended is 10 x your salary to run for a length of time until e.g. a child’s dependency ends. This is commonly when a child reaches 18-21. This figure is based on the capital being invested and paying a 5% return. This is estimated to equate to what a dependent currently costs out of your take home pay. If you are unsure on a figure then please email for an adviser to contact you.
As your adviser, we will assist you in determining how much cover would be needed in order to put the right amount of protection in place and over what term
Do I Pay Tax On The Pay out:
The payout from a life assurance policy is tax free, however the money could then from part of your estate and be assessed for inheritance tax. The current threshold for the 08-09 tax year is £312,000 per person. The easiest solution is to write your life assurance into trust. This means any payouts are made directly to your chosen beneficiaries avoiding your estate and inheritance tax.
Assumptions We Have Made:
When obtaining a comparison quote we make certain assumptions about you;
> Policy start date is the day after the quotation request is made.
> You are in good health
> Please note that if you have an existing medical condition your chosen insurer may request you to answer a more detailed set of questions and this may result in your previous quote being increased
> All applicants are U.K resident
> For decreasing term assurance quotes your outstanding mortgage amount and term remaining are the same as the life assurance and term requested
Should I Put My Policy In Trust:
Placing your policy in trust is important if on your death you wish the proceeds of your life insurance to be paid to your dependents in a straight forward manner. For the vast majority of situations, the most sensible thing is to put your life insurance policy in trust using a Flexible Trust. We will advise you of your options in this area once the type of cover has been determined.