What are the different types of protection?
13 Jan 2022
At LifeSearch, we’ve got a lot to offer you in terms of protection, no matter what you’re looking for. But life insurance policies have got a bad rep: many people think that getting a protection policy is complicated or confusing - and sometimes it can be! Luckily, we’re here to break it down for you. If you’re considering buying a life protection policy but you don’t know what to go for, let us help you out. Here’s our break down of the different types of protection on offer to you.
Life insurance...sounds familiar, right? This is the most well known kind of protection policy, but you might only be aware of it in terms of something from a movie that the evil stepmother kills her richy rich husband for…
In reality it’s a lot less sinister and a lot more simple than this. Life insurance protects your loved ones with a lump sum, tax free pay out when you pass away, which helps ensure that they don’t suffer financially when you’re no longer around.
You can buy a policy either to cover you for your whole life, or to cover a specific period of time (for instance, until your mortgage is paid or your kids are old enough to leave home). You’ll be covered for common causes of death like illnesses and accidents, and depending on your policy you may also be covered for terminal illnesses and suicide. Some things are often excluded, like pre-existing medical conditions, chronic illnesses, drug and alcohol abuse, high risk activities, and disabilities. It’s also possible for these things to remain covered, although this will cause the price of your premiums to rise. Make sure you read the fine print when buying your policy so you know you’re covered how you want to be covered!
Life insurance is also more affordable than many people think, but the cost of your monthly premiums will depend on a few things, like your health, age, smoker status, job, hobbies etc. It’ll also depend on how much cover you want. For instance, if you want a small lump sum after a long period of time, it might end up being cheaper than a whole of life policy with a big pay out. Read more about the average cost of life insurance in our article here.
Many people think a life insurance policy is something you have to have when you buy your mortgage, and they’re not 100% wrong. Whilst it’s not legally mandatory, many mortgage providers consider it a must-have before lending you the money, and it’s definitely a handy way to buy yourself some peace of mind.
This is what Mortgage protection is for. Mortgage protection is a type of life insurance taken out alongside your mortgage. There are two types of cover, and the type you need will depend on your mortgage. You can get level term cover, which offers the same amount of cover throughout the course of the policy, or decreasing term cover, where the pay out reduces over time to match the reducing debt of the mortgage. Our experts will help walk you through this, and a mortgage broker will be able to help you too!
Critical Illness Cover
Critical Illness Cover pays out a lovely little tax free lump sum if you’re diagnosed with a critical illness, or become seriously injured, during the course of the policy. Think of critical illness like an insurance policy… you pay it every month, and you hope you never have to use it, but if you do, you’re glad it’s there.
You decide on the length of the policy, just like with life insurance. All critical illness policies will cover common serious illnesses like heart attacks, major organ failure or transplant, strokes, and some cancers. The list doesn’t stop there though, as each plan can cover many more illnesses and injuries, along with cover tailored for your little ones. Read more about what is covered by critical illness insurance here.
No one wants to think about getting too sick or injured to work, but unfortunately it does happen. You’re more likely to be off work sick than to die before retirement, and whilst you’ll get Statutory Sick Pay and you might have savings, Income protection can provide you a safety net. Income protection provides you with a percentage of your salary (usually 50-70%) monthly when you’re too sick to work, and the payments will continue until you’re back on your feet, you retire, you pass away, or your policy runs out. Read more about how income protection works here.
You’ll be covered for most illnesses or injuries that leave you unable to work, like stress or mental health related conditions, spinal issues, cancer, heart conditions, strokes, etc. Most of the time you won’t be covered for pre-existing conditions, conditions that result from alcohol and drug abuse, or redundancy. Read more about what income protection covers here.
Family Income Benefit
Family Income Benefit is the best way to become a real life superhero in your family’s eyes. If you’re insured through family income benefit, your family will receive a regular tax free income (either monthly or quarterly) when you pass away. In the majority of family households, at least one regular salary is relied on to cover the bills, mortgage repayments and household spending. But what happens if one of these main providers passes away? Family Income Benefit is there to cover household and living costs when the main earner is no longer around.
You get to choose how long your policy lasts. Many people choose a policy that won’t end until after their children are financially independent, or until their mortgage is paid off. If you choose a 20 year term and pass away a month into this term, the payments would begin from the date of death through to the end of the policy, so your family would receive payments for 19 years and 11 months. If you pass away 18 years into the term, the payments would only pay out for two years, as this is what is left of the term. For more details on Family Income Benefit, read our article here.
Over 50s Life Cover
Life insurance gets more pricey the older you get. If you’re getting up there in years and you’ve never taken out a policy before, or you had a policy that expired years ago, but you’re thinking about buying a life insurance policy, never fear! Over 50s life cover is here!
Over 50s life cover is for anyone aged 50-80 (some insurers will go up to 85) and you’re guaranteed to be accepted! There are no lengthy medical questionnaires, and the monthly payments don’t have to break the bank. The cost of the premiums will depend on only your age and the amount of cover you choose, but they’ll be cheaper than standard life insurance.
How LifeSearch can help you
We know life insurance can seem high stakes. You want to protect your family and the life you love, we get it. We’re trying to make life protection products more accessible, so we’re here to help you. We were founded in 1998 to do right by you.
We're on the phone to help, to advise and to talk when you need us. We're a family company that protects families. We're experts, we care, we're here so you can protect the life you love. Give us a call on 0800 316 3166 today for friendly, expert advice - free of charge - or fill in our Advice and Quote form.
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