Explaining Protection Insurance
2 Aug 2019
Life insurance - a bit of a minefield, right? True, there are a lot of options and technicalities around life insurance but each available product covers a different base. Once you start to break it down, it’s just about finding the right insurance one for you depending on your personal circumstances. When you’ve pinned down the right product, you can begin finding the perfect policy for you.
What are the different protection insurance products?
Let’s take a snapshot look at the main options…
Life insurance - pay a monthly premium and your insurer will pay your beneficiaries a tax-free cash lump sum when you pass away. Generally, you insure yourself to cover a ‘term’ - the period of time for which your beneficiaries would be dependent on you, so for example until they are old enough to support themselves financially.
Family income benefit - like life insurance, you pay a monthly premium but instead of getting a lump sum, your beneficiaries receive a tax-free monthly income when you pass away. Family income benefit is usually cheaper to buy than the equivalent amount of life insurance.
Mortgage life cover - a type of life insurance specifically designed to pay off your mortgage if you were to pass away before you complete the payments. Your policy would be tailored so that it matched the payment details of your mortgage.
Income protection - protects you and your family if you are unable to earn. Income protection covers up to 70% of your gross pay and pays out if you’re ill, disabled or can’t work due to injury - and therefore not receiving an income.
Critical illness cover - a type of insurance that pays you a tax-free cash lump sum if you’re diagnosed with one of the illnesses listed in the policy. You would be free to spend the payment however you wished.
So, which is the right policy for you? Ask yourself why you want to be covered. Is it because you’ve bought a new home and insurance cover could allow your partner or family to pay off the mortgage when you’re not around anymore? Is it because you have children and you want to provide for them whilst growing up if your income is no longer there to rely on? Perhaps you want to leave a legacy and provide your surviving relatives with an inheritance, or you want to cover the costs of your funeral.
Whatever the reason, if you’re still a little unsure which product is the most suitable then give us a call. We’ll talk you through the options and search the market to find the best cover for you
Average cost of income protection
30 Jul 2020
You want to protect your salary, but you don’t want to have to spend a lot of money doing so
Joint Income Protection Insurance
22 Jul 2020
Is a joint income protection policy possible?