There are many different things to consider when looking at a life insurance policy. Although the different things may make things more complex, it also means it gives us some flexibility to ensure the policy is tailored to what you need.
All of these options mean we can look at things like:
Cost – we can make alterations to fit in with a budget.
Pay out – do you want a lump sum pay out or a monthly payment?
Amount of cover – do you want the amount of cover to change over time? You may want an increasing amount of cover to go up with inflation for example, or you may want to look at a policy that reduces in lined with children getting older or a mortgage balance coming down.
Type of policy
The first option is to with whether you are looking for a policy for personal reasons or business reasons. We will look at some examples that fall under each of those below.
Personal policies include:
Term assurance – Term assurance is probably the most common type of life cover. People typically take these out to cover a mortgage. You can take these out on an increasing, level or decreasing basis.
Decreasing would usually be taken out to cover a repayment mortgage.
Level cover would normally be taken out to cover an interest only mortgage. Some people may even choose this option where the mortgage is on repayment. For the difference in cost, it would also start to provide an additional amount of cover for funeral costs or to help the survivor out with some additional money.
Family Income Benefit – Unlike term assurance which pays out a lump sum, Family Income Benefit (FIB) pays out a monthly amount. This can be on an increasing or level basis.
Whole of life policy – This is a policy you pay into and it will pay out when the insured person passes away. These are typically the types of policies sold on the adverts with Michael Parkinson where you also receive a free pen or carriage clock! They are typically not the best value types of policy out there but they also ask very few health questions so can be an alternative for those unable to get cover elsewhere and are the only policy you can keep in place indefinitely. Typically only available to over 50s but there can be exceptions.
Business protection policies include
Key Man cover – This pays out if a key person (it does not have to be a man) within the business passes away. An example here could be that you have a highly skilled person within the business. If they were to pass away, it is likley to company would take a hit to its income whilst you found a replacement or trained someone up. A lump sum would help to alleviate the financial worries whilst that happened.
Shareholders protection – Shareholder protection would be a payout to the surviving shareholder(s) should one pass away. If you have a business with say 3 shareholders and one were to pass away. Their shares would normally go to the next of kin.
The next of kin may not want the shares and you may not want them in the business. Shareholders protection would mean there is a sum of money that comes in which allows you to purchase the shares from the other party. This typically goes hand in hand with a shareholders agreement.
Added benefits
Next we will look at the added benefits. A lot of term assurance policies now included added extras. Some of these are included in the cost, others are paid for extras.
Best Doctors – Best Doctors is included with a couple of providers policies. It gives you the ability to get a second opinion on a disagnosis and on the treatment. The NHS is only able to recommend treatment available on the NHS where as best Drs may be able to make you aware of treatment elsewhere.
Best Doctors Global Treatment – This is an added cost on some policies. It allows you with certain medical conditions to go to the best Drs in the world! It pays for you to get there (flights/hotels), it pays for your stay, it provides some money to pay for food etc and of course it pays for the treatment. There are obviously limits etc, it tends to only cover the more severe conditions but I suppose that is when you want the best that money can buy.
GP service – this is a great little service. How long does it take you to get a Drs appointment? A week? A fortnight? Imagine 24 hours! Also imagine you do not need to sit in a waiting room with people coughing and sneezing! Better still, imagine the GP is happy to spend 30-40 minutes going through everything with you rather than 10 minutes! Sound good? Some insurers include this for free!
Fracture Cover – Ideal for those of you who do sports, football, rugby? If you fracture a bone, you can get a payout!
Mental Health support – Mental health is something that affects a lot of people. The NHS is struggling to provide support. Again, some insurers provide some mental health support. This could be as simple as help with where to go and who to speak to, coping mechanisms or even appointments with qualified professionals.
Trusts
To place the policy in trust or not?
A trust is a way to make the policy more tax efficient at point of payout and get paid to the beneficiary quicker. There is more information on trusts here.
Overview
Life Insurance isnt quite as straight forward as it used to be. With so many different type of policies and then different options within those policies, it is easy to see why you may want some help and advice along the way.
We can help determine what the best or most cost efficient way of helping you achieve your aims are. We are fully qualified and have access to many different providers covering the various options.