Most people have heard about life insurance policies and life assurance policies and assume they are the same. When arranging a mortgage, some lenders may require you to arrange life insurance for the loan, for the obvious reason that the loan is repaid in the event of your death. Life insurance policies will pay the sum assured (the amount of money you are insured for) if you die within the term of the policy, providing you are up to date with your premiums and the original application form was correct at the time of completion. This type of policy is typically used to protect a loan or mortgage and once the policy reaches the end of its specified term, the protection ends.
Life assurance policies will pay the sum assured when you die, but as it has no term or maturity date, it will pay the sum assured so long as the premiums are up to date and the original application was correct at the time of completion.
This type of policy, when written under trust, is typically used to shield your family from Inheritance Tax or to give your grandchildren a helping hand.
The cost of a life insurance policy depends on your age, lifestyle and general health, but we find that life insurance can be very good value for the amount of protection you get and the peace of mind received. We also believe that it can be one of the best weapons in your financial arsenal, as it gives you the ability to provide an income for your loved ones when you are no longer around to provide it.
Can I change my life insurance provider once I have taken out the policy?
Policies can’t be switched from one provider to another — the policy will need to be closed, then a new policy opened with another provider. Benefits of the old policy you have been paying into will be lost.
Can I add extras onto my policy such as critical illness cover?
Unless you took out the option to change the policy when you first started the policy, it is unlikely a provider will allow you to change the terms of the policy. We recommend that you talk to one of our independent financial advisers to find out what options are available to you.
How long does it take for my policy to come into effect?
This depends on underwriting, and there are a two main options available to the provider.
1) Simple/normal terms –the answers given on at the time of application are sufficient for the provider to make a decision
2) Request further medical information, meaning that the answers given on the application form are insufficient for the provider to make an instant decision and request further clarification from a medical professional (usually your GP). Depending on the answers given from your GP the provider may increase the premium, reduce the sum assured, postpone the decision to insure or decline to insure. The provider may request medical evidence therefore requiring you take further medical tests in some cases.
I have been diagnosed with a critical illness. Can I still get cover?
This depends on the condition concerned. Most providers may include a clause to specifically exclude a pay-out if death results from your condition.
Would it be possible to get family cover?
You are unable to insure the entire family but you can still take out cover on each individual person in the family to ensure optimal cover is provided.
Can I take a policy out on my partner?
Yes, this is called life of another, and it allows you to insure someone else. You will pay the cover and you are able to make yourself the beneficiary.
How many providers will you check?
As independent financial advisers we have the ability to scan the entire market, resulting in the best deals.
How is it, you can get better deals than what is on the High Street?
The reason we are able to get a better deal is because most providers are not on the High Street and only deal with financial advisers.
Is it advisable to take out more than just life insurance with my provider?
Sadly, the days of loyalty benefits from having multiple policies with one provider are gone, and we would advise that you shop around for your policies as and when you need them.
My lifestyle has changed since I took the policy out. Should I notify my policy provider?
Policy providers rely on the applicant to answer questions truthy. It can result in a refusal to pay the sum assured if you have withheld information back or concealed it from the provider.
Is it possible to change who my policy's beneficiary?
If the policy has been written in Trust then you can change the beneficiary, otherwise the policy will pay out into your estate.
LR Connections provides expert independent financial advice, accountancy and estate planning services
