| The cost of life insurance has fallen over the past few | | | | provided with an agreed annual income for the |
| years and there's now more choice than ever, at | | | | remaining term of the policy. The cost of policies will be |
| prices that won't break the bank. | | | | affected by the choice of how the payment is to be |
| If you have a family you could provide security for | | | | made. The insurance company will potentially pay out |
| them by taking out adequate life insurance cover. In | | | | less money overall if the insured person lives until the |
| the tragic event of your death they would have | | | | later years of the insurance term. Because of this the |
| enough to cope with, without added financial worries. | | | | cost of family income policies will be lower. |
| There are various types of life insurance and here we | | | | So far we have talked about covering mortgage and |
| cover the types of term policies on offer. | | | | loan payments. Whilst this would certainly be a weight |
| ·A level term policy pays a one off cash payment | | | | off the minds of your family, further cover should |
| on death. The amount insured stays the same | | | | obviously be considered. When working out just how |
| throughout the period of cover. | | | | much money your family would need, should the |
| ·An increasing term policy is another term for | | | | unexpected happen, it is recommended for an |
| indexed insurance. The value of the final payout rises | | | | average and typical family, each parent should have at |
| in line with inflation. Depending on the terms of the | | | | least £150,000 worth of insurance per child, plus |
| policy, premiums may also rise accordingly. | | | | any death-in-service benefits, which are often linked |
| ·A decreasing term policy is designed around the | | | | with your employment. If you choose to take the |
| fact that the amount payable on death will reduce | | | | family income benefit, then it is thought that you should |
| through the term of the insurance, right down to a nil | | | | plan for an income of between £20,000 to |
| balance at the end of the term. | | | | £25,000 per child per year. |
| The policies are often used to safeguard loans and | | | | Another type of life insurance is known as whole of |
| mortgages. The policies above each have their own | | | | life. This pays a guaranteed amount, known as the |
| merits, depending on the type of mortgage you are | | | | sum assured, on the death of the policyholder. There is |
| guaranteeing. | | | | no specified term on this type of insurance. |
| The level term policies are often purchased to cover | | | | It is possible to purchase life insurance with your |
| interest only mortgages, where the capital borrowed | | | | pension fund. If you choose this method of purchase, |
| does not reduce over the years. The capital sum, | | | | you will be allowed tax relief on the premiums, so a |
| remaining the same as the original, is covered by the | | | | higher rate taxpayer will get £100 worth of life |
| cash payment on death. | | | | insurance for just £60. However, due to higher |
| Increasing term policies offer the protection against | | | | administration costs, premiums will be likely to be higher |
| inflation, but are correspondingly more expensive. | | | | and it is felt that this could cancel out any gain to |
| Decreasing term policies are often used for | | | | basic-rate taxpayers. |
| repayment mortgages, where the capital amount | | | | Rather than opt for a joint policy, it's better for couples |
| owing decreases over the term of the mortgage. | | | | to take out individual cover. A joint policy pays out |
| Premiums will be lower for this type of policy, | | | | once, on the death of the first partner, whereas the |
| compared to level term insurance. | | | | individual policies will pay out twice. |
| Benefits from term policies can be paid out in two | | | | Get on to your broker - you'll find one easily if you log |
| ways. The first is via a lump sum payment and the | | | | on to the internet - and find out the costs of protecting |
| second is via a "family income benefit". As far as the | | | | your family. It's worth it for your peace of mind. |
| second method is concerned, your family would be | | | | |