WHAT IS?

CLICK ON THE LINKS BELOW FOR A MORE DETAILED EXPLANATION OF THESE TERMS

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Single and Joint Life

A policy can be taken out by one person, known as single life or two people, known as joint life.  A couple wishing to protect a mortgage for example, who are married, in a Civil Partnership or just living together can have their own individual policies or a joint policy.  Individual policies have separate premiums and life cover amounts and will pay out on each death.  A Joint policy has one premium and life cover amount and pays out on the first death leaving the other with the money, but no insurance. 

Before deciding which is best for you, it is recommended to obtain quotations for both single and joint policies.  One of the reasons for this is simply age!   Women, on average, live 4 years longer than men therefore premium rates for females are cheaper than males!  For example, if a male was between 5 to 10 years older than his partner, the joint premium can be a little less than the cost for 2 individual policies. This means you can get twice the life cover for a little extra premium!   Click the link Couples Living Together if this is you.......

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Reviewable or Guaranteed Premiums

A Guaranteed Premium guarantees that the premium will remain the same throughout the policy's lifetime whereas a Reviewable Premium can change at the insurance company's discretion. (Reviews are currently being made every year or every 5 years - it depends on the Insurance Company).    At the beginning of a policy you will find that reviewable premiums are usually cheaper than guaranteed.  However over the longer term a reviewable premium will increase and often overtake the guaranteed rate therefore this is an important consideration to make if you intend to keep the policy for a long time.   It all depends if you prefer certainty over what you will pay as against the unknown and of course affordability.

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Benefit Type

This asks should the benefit (sum assured/amount of life cover chosen) remain the same or increase throughout the policy term.  "Level" means the amount of life cover chosen remains the same from start to finish.   "Increasing" means the amount of life cover chosen can increase regularly (normally once a year) from start to finish therefore if you choose £80,000 today, it would increase every year.  The rate of increase varies from company to company and can be one of the following:- between 5% - 10% per annum, (RPI) Retail Prices Index, Annual Rate of Inflation. 

Please remember, increasing cover will mean increasing premiums every year.  Having an increasing policy does enable you to ensure your life cover maintains its value in real terms against inflation, which is definitely a good thing!

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Terminal Illness

On diagnosis of suffering from a terminal illness and unlikely to live more than 12 months, the sum assured would normally be payable.

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Deferred

Deferred is insurance jargon for waiting time.  The Insurance Company needs to know how long you want to wait before benefit is paid.  If you had time off due to illness or accident, your employer might pay your full salary for a time, which could be for 4, 13 or even 26 weeks.  For example, Sam is off work due to an accident and his employer will pay him for 13 weeks full pay then nothing thereafter.   Sam should choose a 13 week deferred period.

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Quotation Type - "Benefit driven or Premium driven"

The quotation you request can be premium driven or benefit driven.  What this means is you decide either how much life cover you actually need or how much you actually want to spend a month.  For example, life cover of £100,000 will produce various Insurance Company comparison premiums whereas £40.00 per month premium will produce various Insurance Company comparison life cover amounts.

IMPORTANT NOTE:  few companies offer quotations which are premium driven (determined by the actual premium) therefore it is not recommended you use this route as the results will in all likelihood be unsatisfactory.

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Buy Back Option

If a claim was met under integrated critical illness, then a policyholder may be able to 'buy-back' their life cover up to the amount that was in place at the time of the claim. This can normally be done 12 months after a claim has been met.  It will be treated as a new plan as the old one ends when a claim is made.  Further medical evidence is not normally required, but  premiums will be re-calculated using the latest rates, policyholder's current age and smoking status.

PLEASE NOTE: Not every Insurance Company offers a Buy Back Option in their Policy.  This cover usually has to be selected at the commencement of the policy and cannot be added at a later date.  The cost for Buy Back Cover is relatively inexpensive and a worthwhile addition.

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Integrated or Stand Alone Critical Illness

"Integrated" Critical Illness Cover means that the policy will pay if a critical illness claim is met OR in the event of death - it does not pay out on both.  This is when the Buy Back Option becomes highly valuable (see above).

Stand Alone Critical Illness Cover means that the policy will pay ONLY if a critical illness claim is met - it has no death benefit whatsoever. 

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Waiver of Premium

Waiver of Premium  means your premiums will be met by the company after a waiting period (known as deferred - see above) if you are unable to work due to accident or illness until the end of the policy or you return to work.  In comparison to the overall premium, this is a extremely inexpensive yet highly valuable benefit to have in any policy.

Waiver of Premium is subject to occupation status as determined by each individual Insurance Company.  A clerical worker will probably be accepted without any problem whereas those in more hazardous occupations may not be accepted at all.

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Policy Options and Alterations

Insurance Companies offer various Policy Options which  can be included in your plan.  Here are some typical examples:-

Moving House and Home Improvement Option
If you increase your mortgage to move house or for home improvements, you can take out a new plan without providing further medical evidence.

Marriage/Childbirth Option
If you marry, have children or legally adopt, you can take out a new plan without providing further medical evidence.  You may use this option as many times as you like.

Separation Option
Where the plan covers you and your partner you can change the plan if you separate without having to provide further medical evidence. If one of you rearranges the mortgage in one name only, you can change the plan so that it only covers that person. If one or both of you take out new mortgages on new homes, two new plans can be taken out.

All the options are subject to certain terms and conditions and may vary from Company to Company Insurance Companies offer various Policy Alterations which can be included in your plan.  Here are some typical examples:-

All increases in cover or benefits may be subject to satisfactory evidence of health.

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Hospital Benefit

Some policies include a hospital benefit which is payable if you're admitted to hospital as a result of incapacity for more than seven consecutive nights during your deferred period. An example of what you could receive is £150 for each additional consecutive night (to a maximum of 90 nights) spent in hospital.

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