A term policy will, as the name suggests, provide simple low cost protection for a given period after which time the policy will lapse without value. Rates can be very competitive and will be influenced by your age on taking out the cover, whether you smoke and whether you are male or female (guys are supposedly more likely to do stupid things in cars etc and are likely to be marginally more costly to insure).
With a whole of life plan you know that the insurer will be paying out at some time although this cover is likely to be more expensive. You will die at some stage and (as long as you have kept the policy going) the insurer will have to pay -even if you are 90 years old!!
As you will see from the finder there are various types of life cover with varying applications. Below are common uses of the various plans-
Uses of level term assurance
Uses of a decreasing term assurance
To cover a repayment (capital and interest) mortgage.
Uses of a family income benefit plan
To provide a set income over a term to help fund household bills/education. Remember that the total benefit that this plan pays may be relatively small if death occurs in ,say the last year of a 20 year policy but could be very significant if death occurs early in the term. A level policy will pay the sum if death occurs in the first month or the last month of the same 20 year term.
Uses of a whole of life policy
Useful if there is a need to ensure that cover never comes to an end. Can be reasonably priced if taken out early and is often backed by an investment element that builds up over time to help keep costs under control later in life. If this investment linked plan is encashed at an earlier stage than when the fund has been depleted to help meet premiums then a cash sum can be drawn out (sometimes referred to as cash if you die, cash if you don't die policy) whereas the plans mentioned above very rarely feature any investment element and will not build up a savings element to be paid out on stopping the policy.
Using our
Protection Finder we will provide the cover you need as a contractor. Please also read our
Private Client Agreement.
You could consider taking 'waiver of premium' as a low cost option to protect your payments against you being unable to work through sickness after 6 months. The insurance company then maintains the premiums for you so that your dependents/loans remain protected.
Certain life policies have an investment element. It is important to understand that these investments are longer term in nature and that the value of investments and income from them can fall as well as rise. Past performance is also no guarantee of future performance
Financial advice on these pages is being given by FreelancerMoney, which is a trading name of ContractorFinancials Ltd and is regulated and authorised by the Financial Services Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage
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