Decreasing Cover is when your policy decreases in value as the term of the policy goes by.  People tend to buy this type of Insurance to cover repayment mortgages.

 

If your policy is for £100,000 over 20 years, it is worth £100,000 on the first year of the policy, but only worth £50,000 by the time year 10 arrives.  In the event of a valid claim this type of insurance is index linked and designed to cover the remaining mortgage and nothing else.

Life Insurance is a policy that pays out in the event of the policy holder’s death. 

 

How much will my policy pay out?

The policy will pay whatever you chose to Insure yourself for. 

 

Who will the Insurer pay the money to?

The Insurer will pay the money into your estate.  From here the money will be passed to whoever is to inherit that estate according your will, or in the event you do not have a will, your next of kin.  If you would like to by-pass inheritance delays and complications – you can leave your money to a trust.

 

What is a Trust?

A trust will apportion the money the money to individuals specified by you when you arrange the Trust.  At Home Shield we are can arrange these trusts very simply by completing a document that is then held by the Insurance Provider.  The Insurer will then action your trust in the event of a valid claim.  Trusts are arranged free of charge through Home Shield, and can be done when you arrange your policy – or at any time your policy is live.  
If you would like more information about trusts, or have any inheritance tax queries then please ask your advisor who can provide you with detailed trust information and options  and can point you in the right direction for any tax queries and advice.

 

How Much is Life Insurance Likely to cost?

Life Insurance premiums start at £5 per month.

 

What is Whole of Life Insurance

Whole of Life Policies run until your death.  
When you arrange ordinary Life Insurance you have to specify at point of application how many years you would like the policy to run for, and then the policy will expire, but with Whole Of Life – this is not the case.

 

How much will my policy pay out?

The policy will pay whatever you chose to Insure yourself for. 

 

Who will the Insurer pay the money to?

The Insurer will pay the money into your estate.  From here the money will be passed to whoever is to inherit that estate according your will, or in the event you do not have a will, your next of kin.  If you would like to by-pass inheritance delays and potential complications – you can leave your money to a trust.

 

How Much is Whole of Life Insurance Likely to cost?

Life Insurance premiums start at £10 per month.

Income Protection will pay a monthly sum to you in the event you are sick, or incapacitated in some way and cannot work.  It differs from Critical Illness because it will not pay a lump sum of money, and if you become well enough to return to work the payments will stop.

 

How much does it cost?

Premiums vary between insurers, and the cost will depend entirely on many factors:
Occupation
Age
Length of Policy
How much you insure yourself for
Your medical background
Your current health and lifestyle

 

What illnesses are covered?

Each Insurer covers different illnesses and severities of them.  It is important to understand that not everything is covered, and these policies only cover illness and incidents that prevent you from being able to work– for example – back pain, depression and broken bones are excluded from Critical Illness Policies because they are not severe enough – but anything that prevents you from working is covered on Income Protection, providing you are medically not fit for work.

 

What is the deferred period?

This is the length of time you have to be off work for before you are eligible to claim.  The options are usually 3,6 or 9 months.  For example with a deferred period of 3 months, if you have back pain and are signed off work for 2 weeks then you cannot claim.  If your back pain worsens  and you end up being signed off work for 6 months, once you have gone past the 3 months you could claim and would be paid for a further 3 months until you return to work.  On the other hand If you suffered a heart attack and could never work again, the policy would pay you out each month until the policy ends – this could be 10 years or more.

 

Who would the Insurer pay?

You – the policy holder.

 

I have already been diagnosed with an illness. Can I still buy it?

If you have been diagnosed with a serious illness – such as Cancer – then you are likely to be declined, certainly until you are recovered.  Once recovered, your application would be assessed individually and you stand every chance of being able to buy Critical Illness Insurance. 

If you are Asthmatic or diabetic for example – as these are not serious illnesses and you are likely to be accepted.
Insurers will assess your medical health at point of application – known as ‘up front underwriting’, and this is when you are required to disclose your medical information – the insurer will then assess each application individually.

Critical Illness is a policy that will pay a lump sum to you in the event you are diagnosed with a Critical Illness specified in the relevant insurers policy document.  A valid claim can only be made when the Critical Illness is specified – and meets the severity of the Terms & Conditions also which are specified by each insurer. 

 

Are Critical Illness Policies all the same?

No.  Each Insurer offers something different to the next.  It is essential that you compare policies before making a decision of who to buy your policy from.

 

Are they all the same price? And how much does it cost?

Premiums vary between insurers, and the cost will depend entirely on many factors:
Age
Length of Policy
How much you insure yourself for
Your medical background
Your current health and lifestyle

 

What illnesses are covered?

Each Insurer covers different illnesses and severities of them.  It is important to understand that not everything is covered, and these policies only cover severe illness – for example – back pain, depression and anxiety are not things you would find included in any insurer’s policy – but Stroke and Heart Attacks would be included in most.  If you suffered from a stroke for example, you would have to meet the criteria of severity to claim however, some mild stroke’s would not meet these Terms & Conditions and would therefore not result in a valid claim.

 

Who would the Insurer pay?

You – the policy holder, unless you have specified in a pre-arranged trust that you would not like to be the beneficiary of a Critical Illness Pay out and specify someone else.

 

I have already been diagnosed with an illness. Can I still buy it?

If you have been diagnosed with a serious illness – such as Cancer – then you are likely to be declined, certainly until you are recovered.  Once recovered, your application would be assessed individually and you stand every chance of being able to buy Critical Illness Insurance. 

If you are Asthmatic or diabetic for example – as these are not  serious illnesses and you are likely to be accepted.
Insurers will assess your medical health at point of application – known as ‘up front underwriting’, and this is when you are required to disclose your medical information – the insurer will then assess each application individually.

Level or Decreasing Cover

Decreasing Cover is as explained in the Mortgage Protection information.  Level Cover means that the policy will not de-crease and is worth the same value all the way through the whole term of the policy – it will not alter.  If you take out a £100,000 policy for example, it will still be worth £100,000 the day the policy expires.

 

Fixed or Reviewable Premiums.

Fixed premiums means your monthly premium will stay the same for the whole term of the policy.  It cannot be increased or decreased.  Reviewable Premiums gives the Insurer the option to increase your premium throughout the term of the policy as you age and your health becomes more risky.

 

Waiver of Premium.

Adding this feature will mean that should you become incapacitated and unable to work due to illness or an accident, the Insurer will take over paying your premiums until you are well enough to return to work and resume paying for your insurance yourself.

 

Choosing your term.

This is the number of years you wish to be insured for.  If you are buying Mortgage Protection only, then you should match the length of your policy with the years remaining on your mortgage.
If you are looking at covering funeral costs and leaving a money to tie up your loose ends etc.. maybe Whole of Life Insurance would be the best option for you?   this will run until your death.  When it comes to Family Protection you must consider the ages of your dependants and what their needs may be in the future if you were no longer able to financially support them and contribute.

 

Choosing the value of your policy.

For Mortgage Protection your policy should start out matching the amount outstanding on your mortgage. 
For Family protection you should calculate what is needed to clear outstanding loans and debts, and add on to this the value of any mortgages which are interest only, or may flip between interest and re-payment, also consider funeral expenses.  You may also want to include or ‘round up’ the value of your policy to leave a ‘nest egg’ to allow your family some breathing space. 
Critical Illness needs to be calculated to replace your total financial contribution in the event you cannot work again, as does Income Protection – this is to replace your monthly salary.

 

Your advisor will be able to guide you through these options and your decisions, everything will be explained in full as you discuss your Insurance Quotes.  All of these options affect the premium you will pay – so you may want to consider more than 1 insurance solution and compare lots of quotes.