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Life and Critical Illness Assurance

Life and Critical Illness Assurance

What is Life Assurance?

Life assurance is essentially a policy that pays out a tax free lump sum of money in the event of your death.

Life assurance cannot bring back a loved one, but it can prevent a family’s grief being made even worse by the misery of financial hardship if a vital breadwinner is lost. It ensures that mortgage payments, credit card debts and weekly shopping bills can still be covered.

As life assurance only pays out on death it is still advisable to consider additional polices such as critical illness cover, which can sometimes be built into life cover and will pay out should you develop one of the many critical illnesses covered within the policy.

The two most popular types of policies are level term assurance and decreasing term assurance:

Level term – This pays out a fixed amount to your dependants if you die within a fixed term which is chosen by you. This would usually coincide with the term of any major credit commitments such as a mortgage or until your youngest child reaches an age of independence, dictated by you. The cost of this type of policy is usually greater than a decreasing tem

Decreasing term – This policy is aimed at covering the remaining debt on a repayment mortgage, if you die within a set number of years. The policy decreases in line with your capital repayment mortgage balance. This cover is usually cheaper than level term as the sum assured decreases over the term of the policy.

Do I need it?

Life assurance offers a relatively cheap and straight forward way of ensuring that the financial needs of your family or any other dependants are met in the event of your death.

Couples without dependants will usually still wish to protect their partner/spouse in event of their death. If you have dependants – such as school age children, a partner who relies on your income or a family living in a house with a mortgage that you pay – a life insurance policy can provide for them if you die.

You can’t rely on the government to take care of your family – the money they would get from the state is much lower than you’d probably expect. If you want to provide for your family financially if you die, life assurance is a must.