What is Life Insurance
Life insurance provides financial security for your family in case the unexpected happens. It offers peace of mind, knowing that your loved ones will have support when they need it most. However, choosing the right policy can feel overwhelming. Instead of trying to figure it all out on your own, our unbiased advisors can guide you through the process and provide advice at no cost to you. (We are paid by the provider for our services.)
At Your Life Cover, we work with a wide range of insurance providers, giving you access to competitive and tailored plans that suit your needs.
If considering life insurance alongside a mortgage, it’s important to understand that your home may be at risk if you do not keep up with repayments.
What Is Life Insurance?
Depending on your type of policy, Life insurance policies pay out a lump sum (known as the ‘sum insured’) when the policyholder passes away. Each month, the policyholder pays a monthly premium to the insurer in exchange for a pay out, should the worst happen. There are several different types of policy and the right one for you will depend on a number of different things, for example:
How much cover you want?
Whether you want the sum insured to cover a specific debt (like a mortgage)?
How much you can afford to pay in premiums each month?
What is Mortgage Protection?
Mortgage protection is a type of life insurance policy that covers the cost of your mortgage. This means that, if the worst were to happen, your family won’t have to worry about how to pay the mortgage without you. Instead of worrying, you’re family will receive a pay-out covering the cost of the mortgage.
Now, it’s totally up to you how much cover you get. So, if you’d like to cover more than the cost of your mortgage, that’s fine too. One of our friendly advisors will ask you about this, so they can give you their personalised advice.
Level Term vs Decreasing Cover
Mortgage protection insurance is a type of life insurance that covers the cost of your mortgage protection in the event that the worst should happen.
Mortgage Protection Insurance is available as both level term and decreasing cover. To best understand what’s right for you, we recommend consulting a Your Life Cover financial advisor.
A mortgage protection policy with decreasing cover is pegged to the value of your mortgage. As your mortgage decreases over time, so will your insurance cover.
What is Family Protection Insurance?
Family Protection is a type of life insurance. Unlike traditional policies that pay out a lump sum, family protection insurance provides beneficiaries with a regular, tax free income.
Regular income payments run from the date of death, until the end of the policy term. Or as chosen at the outset by the policyholder. Family Protection can be well suited to new parents with young children, who want an affordable way to ensure their dependants are looked after in case the worst happens.
The benefit of regular payments, instead of a lump sum, is that it can comfortably replace a lost income.
How does Family Protection Work?
Before you buy Family Protection you need to consider the future living costs of your family. Don’t worry, we know that this is a daunting task; our specialists can help you with this. Ideally, this would cover all family living costs, not just now but in the future too.
Then, you need to decide how long you require the cover to last, (known as the ‘term‘). Often policyholders ensure the term lasts until their children are financially independent.
Generally, this tax-free income is paid monthly Although it can be paid quarterly, or in a lump sum if you prefer. This can help with the long-term budgeting of day-to-day living expenses in case you’re not around.
To ensure your family protection payments meet your dependant’s needs, both now and in the future, it may be a good idea to link it to indexation.