Whole of Life Policies

A whole of life policy is another policy which does exactly as it says. It covers you for the whole of your life. When the inevitable happens, providing the policy is still in force, it will pay out a death benefit. Although they can provide a surrender value, they should not be used for investment purposes due to the deductions made for the death benefit.

As payment of the benefit is inevitable Whole of Life policies tend to be more expensive than Term Assurance policies for the same level of cover (it depends on what age you are when you start the plan). Each premium is made up of a mortality element and a savings element. Upon death, a fixed sum is paid to the beneficiary along with the balance of the savings element. The performance of the underlying investment fund for Whole of Life Plans is important, as the cost of future premiums depends on fund performance.

These policies come in various forms:

 Non-profit whole life policies – A level premium payable throughout life. It pays a fixed cash sum at the time of death.

 With profit whole life policies – Same as non-profit policies but the amount paid on death is the sum assured plus whatever profits have been allocated.

 Low cost whole life policies – These have a guaranteed level of cover that the amount payable on death is the greater of the basic sum plus bonuses or the guaranteed death sum assured.

If you are worried about investment risk and increasing premiums, there are Whole of Life policies available which do not rely on fund performance, however, these do not acquire a surrender value. Please be aware that in some cases this type of assurance is based on an assessment of the health of the applicant

A group or corporate insurance policy is purchased by an employer for eligible employees of a company.

One of the key employee benefit packages provided by employers, a group life insurance plan, in some cases, may also provide cover to family members of employees.

Life cover

Naturally, we all want to do the best for our families, and keep them properly protected on every occasion. In simple terms, life insurance provides a tax-free lump sum on death.

If you need convincing that life insurance is a good product to buy, ask yourself this question. If you were to die, how much money would your family have to live on? Many families would find themselves running short of money very quickly. Your salary would stop, but the household bills and mortgage repayments would still need to be paid.

A payout from a policy could make the difference between your loved ones facing a financial struggle at a challenging and emotional period in their lives, and being able to maintain the sort of lifestyle they enjoyed when you were still around.

Most people tailor their policy to ensure that their financial commitments would be met in the event of their death, so policies are often aligned with the term of a mortgage or other loan.

Life insurance isn’t the only form of protection policy you can take out. Here are some other policy types that families with mortgages often consider.

Income Protection

This type of policy pays a monthly income tax-free if you are unable to work due to an illness or injury. The monthly income under the policy will be between 50 and 70 per cent of your salary and will be paid until you are fit enough to return to work, or reach retirement age.

State benefits often aren’t very generous in this area and only a few employers will continue to support their staff through a long term illness, so income protection policies can help families through difficult financial times.

You can choose the date at which the policy would pay out in the event of a claim. This can range from a month to up to a year. Policies that pay out sooner will have higher premiums.

Critical Illness

Critical illness cover pays out a tax-free lump sum if you are diagnosed with a major illness as specified in the policy, for example cancer and heart disease. Some insurers will make a part payment on an early-stage diagnosis of a condition specified in the policy, the percentage will vary from company to company.

Many people buy a combined life and critical illness policy, and it often makes sense to do so. In this case, a payment would be made on either diagnosis of a critical illness, or death, whichever is the sooner. If the cover is combined in this way, the policy premium is usually cheaper than it would be for separate policies, as there is only ever one lump sum paid out by the insurance company.

Family Income Benefit

These policies can offer affordable cover for growing families. Family income benefit policies work in a similar way to ordinary life cover, but instead of a lump sum the policy pays out a regular income if the policyholder dies.

Parents of young children often consider this type of policy, and take it out jointly, as it means that if one of them were to die during the term of the policy, then an income would be paid out for a pre-determined period. So, for example, if you had a 20-year policy and were to die five years into it, then the policy would pay out a regular income for the remaining 15 years.

This type of policy can also be combined with critical illness cover.

Writing a policy in trust

This simple formality is now widely used to help pass money on swiftly and efficiently to loved ones on death. A trust is a legal arrangement that ensures the payout from your life policy can be made directly to your beneficiaries, for instance your wife or your children, and doesn’t form part of your estate, and therefore isn’t subject to Inheritance Tax.

In addition, the payment wouldn’t have to wait until the grant of probate (the legal document required to administer your estate) has been granted. Obtaining probate can be a lengthy and time-consuming process, but if a policy is written in trust, the proceeds can be paid out once a death certificate has been obtained.

Joint or single policies

Should couples have one policy or two? Although couples often share a lot of things, when it comes to life insurance it can make sense for each partner to have their own separate policy. A ‘single’ life policy provides cover for that person only, and pays out the amount of cover provided under the policy if the insured dies during the policy term.

By contrast, a ‘joint’ policy covers two lives, normally on what’s referred to as a ‘first death’ basis. This means that the policy pays out if during its term one of the policyholders dies. As the policy is designed to pay out only once, it will come to an end. So, in this case, the surviving partner would no longer have any life cover under this policy. If instead each had their own policy, the survivor would still have life cover in place.

Not all IHT solutions are regulated by the Financial Conduct Authority.

Is your home protected against life’s unwelcome and unexpected events? As well as ensuring you have life cover in place to protect your mortgage, you should think about insurance for your home and contents too. Home insurance is a valuable safeguard that protects millions of families each year from devastating events like fire, flood and burglary.

Buildings insurance

Buildings insurance is a product and usually essential if you have a mortgage. Your lender is likely to insist you have cover in place to protect their financial interest in your property.

You’ll need to insure for what’s called the ‘rebuild cost,’ which is the amount of money you would need to completely rebuild your home from scratch should disaster strike. This isn’t the same as its market value and is usually less. That’s because the market value includes factors such as location, local amenities and supply and demand.

We can help you find a suitable policy that provides the right level of cover for your needs. We’ll explain about the additional cover you can take out to cover unwelcome events like home emergencies. This can include cover for boiler breakdown, burst water pipes, or gas or electrical failures.

Contents insurance

Home contents insurance covers all the things kept in a home such as TVs, furniture and carpets and personal belongings. You can also include additional cover such as accidental damage that will insure personal items when they are used away from home such as laptops, jewellery, phones and cameras.

When thinking about home contents insurance, you need to ask yourself how you would cope if you were to lose everything. Replacing all your possessions would be an expensive exercise, so contents insurance is vital to cover unexpected events like burglary or fire. With the average value of contents in a three-bedroom family home estimated at £55,000*, it’s important to be fully insured at all times.

Most policies offer new for old cover, meaning you will get the full replacement value if they are lost, stolen or damage.

Visit the link below for more info

*https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/home-insurance/

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.

If you’re looking to make your next move up the housing ladder, we can help you every step of the way. Whether you’re moving because of work, need more room for your growing family, or are looking to downsize, we’ll be on hand to offer advice and make the process less stressful. We know that selling your existing property and buying another can seem like double trouble, but you’ll be pleased to know that over the years we’ve successfully helped scores of people make their next move.

Before you can make your offer on your next home, you’ll need to have an Agreement in Principle from a mortgage lender that gives an indication of how much you can borrow. We’ll explain the process, and offer advice on the appropriate level of deposit you’ll need to make sure you get the most suitable mortgage.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.