Types of Life Cover

//Types of Life Cover

There are many types of life insurance available to you as a tradesmen and making a decision on the right type of policy can be difficult. If you would like to speak to a qualified Independent Financial Advisor to get help and advice please ring our offices on 0845 070 4235 or email us at nick.wylie@alliedinsurance.co.uk with your questions and one of our Advisors will contact you.

To give you an idea of the covers available to you we have put together a list of the different type of life insurance available to tradesmen and self employed contractors.

Level Term Life Insurance
This is the most common type of Life Insurance and is often called Level Term Life Insurance or Level Term Life Assurance. This type of policy will provide you with an amount of life insurance cover that remains the same throughout the term of the policy.

If you die within the term of the policy, your family and loved ones will get a guaranteed cash lump sum, without which they may struggle having not got your income to pay the bills.

Premiums start from as little as £5 per month.

Decreasing Term Insurance
Decreasing Term Insurance has been specifically designed to repay a repayment mortgage. With a repayment mortgage the amount you owe the lender decreases each month as you pay off a bit of your mortgage with each monthly payment you make to the lender. Your life insurance will also decrease each month in line with your mortgage. Therefore in the event of your premature death, before the mortgage has been repaid, there will be sufficient money provided by the insurance company to repay the mortgage lender.

Though the amount of life cover decreases the monthly premium stays the same. The advantage of this type of policy is that the monthly premium is cheaper than a normal life insurance policy (level term assurance).

Family Income Benefit
Family Income Benefit is a term assurance product that, in the event of a claim, pays out a regular income for the remaining term of the policy, instead of a one off lump sum. It is used to provide financial security covering regular financial commitments until a fixed point in the future.

The policies are ideal for those people with young families and are concerned about protecting the welfare of their children as they grow up. It is also an ideal policy for couples who are reliant on each others income to pay the regular outgoings such as rates, bills, rent, travel, subscriptions, policy premiums and educational fees.

The plan can also be used alongside divorce settlements. The children are safeguarded should the parent making maintenance payments die before the maintenance payments stop.

Critical Illness Insurance
Critical Illness Insurance is a feature than can be added to any of the policies above or stands alone as a separate policy in its own right. If you are diagnosed with a critical illness, mainly cancer, stroke, heart attack or total and permanent disability then the insurance company will pay out a lump sum if the event happens within a specified time.

Other illnesses are included in the policy such as motor neurone, multiple sclerosis and alzyhmers. However insurance companies do vary with what is and is not included in the policy and care needs to be taken to ensure that if you are concerned about a particular illness/disease that the chosen insurance company does have that cover within its policy. You are 4 times more likely to be diagnosed with a critical illness than die before the age of 65 and therefore it can be argued that this type of cover is more important than life cover.

  • How would your life change if you were in a wheelchair?
  • How will the income you were bringing into the household continue?
  • Need to move from a house to a bungalow? Need new (lower) kitchen and bathroom units and appliances. Stair lift, wider doors, special chairs, front and back door step adjustments.
  • Need to change or adapt your car for transport.
  • Will you need medical care and carers as the State does not provide for all of this.
  • Can your family cope. Will they need to travel to help/meet you. Will they need training to care for you?

Being diagnosed with a critical illness is a life changing experience that will cause emotional and financial stress. Having a critical illness policy will at least reduce the financial stress.

Keyman Insurance
Within a business there is generally a key employee or employees who are responsible for the turnover of the business. They are the one who bring the business in and without them the business will suffer. Turnover will reduce, profitability will reduce and the firm will incur costs in either replacing them or temporarily replacing them. A business can protect itself from the death of a key employee that would cause then financial hardship. This is done by a 5 year renewable term assurance policy.

As this tends to be a specialist subject it may be best to discuss your requirements with us in detail. You can contact us on 0845 070 4235 or email us at nick.wylie@alliedinsurance.co.uk

Partnership Assurance
Many contractors run their business on a partnership basis. In the event of one of the partners dying the surviving partner(s) is likely to face many financial problems. The main one being that the deceased partner has left their share of the business to their next of kin. Can the surviving partner(s) now work along side the next of kin or would they prefer to have funds in place to purchase the next of kin out? This can be done with a 5 year Renewable Term Assurance Policy.

As this tends to be a specialist subject it may be best to discuss your requirements with us in detail. You can contact us on 0845 070 4235 or email us at nick.wylie@alliedinsurance.co.uk

Shareholder Assurance
Many contractors run their business on a limited company basis. In the event of one of the directors dying the surviving director(s) is likely to face many financial problems. The main one being that the deceased director has left their share of the business to their next of kin. Can he surviving director(s) now work along side the next of kin or would they prefer to have funds in place to purchase the next of kin out? This can be done with a 5 year Renewable Term Assurance Policy.

As this tends to be a specialist subject it may be best to discuss your requirements with us in detail. You can contact us on 0845 070 4235 or email us nick.wylie@alliedinsurance.co.uk

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