LONG TERM INSURANCE
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~ Term Life Insurance & Whole Lifecover
Long Term Insurance ~ Term Insurance or Whole Life Cover ?
There are 2 main types of Long Term Insurance cover, whether it be a lump sum or income:
- Term Insurance pays out only if you die within the specified term - ie; if policy expires at age 90 - it will not payout if you die age 91.
- Whole of life assurance pays out whenever you die and some plans may or may not also contain an investment element to them. By their very nature, these plans will pay out on death whenever this may occur, so cost a lot more than term assurance plans.
Note: We currently only advise on guaranteed premium whole lifecover long term insurance plans, so do not advise on whole life insurance with an investment element only - but can refer you to a fellow IFA from the Sesame Network should you wish.
Long Term Insurance - Term Lump Sum Cover
This is the simplest and cheapest type of long term insurance, and is known as term insurance because you choose how what term or long you're covered for, say, 30 or 40 years (the term).
Term insurance only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out if either of you die during the term.
Things to look out for ...What type of long term insurance policy do you want? For example
- Increasing policy (where cover and premium rise over the years)
- Decreasing policy (where cover and premium fall over the years)
- Renewable policies (which let you extend the original term).
Long Term Insurance - Term Family Income Benefit
This policy pays out a income on death to your family rather than a lump sum & maybe suitable for those who require income on death. This plan may be increasing to help offset inflation.
Long Term Insurance Advice - Check the Small Print
Check for exclusions - in other words, when the policy won't pay out. For example, most Long Term Insurance plans do not cover death due to alcohol or drug abuse. You might not be covered while taking part in risky sports. If your health is poor before the policy starts, some causes of death might be excluded or you might be refused cover altogether. eg; You have developed health problems such as had a heart attack, stroke, depression, cancer, diabetes or say stress. Please ensure you advise the Life Insurance Companies otherwise this may result in none-disclosure & the plan is void.
Premiums shown are usually fixed for the whole term. There are also Long Term Insurance Life insurance cover contracts where premiums are reviewable, either annually or after a certain period, usually 5 years.
How flexible is a Long Term Insurance contract? Can you reduce or increase cover easily as your circumstances change? Are there extra charges for doing this? Does cover stop immediately if you miss a payment or is there a period of grace?
By paying extra, you can usually include a waiver of premium. It pays the premiums if you can't work because of a long-term illness so that your cover is not interrupted.
If you want to change insurer, check the level of premiums for the new contract before switching (premiums may have gone up because of older age or because you have developed medical conditions). Also check the new level of Long Term Insurance cover compared to the previous one. Different benefits may be available, and different exclusions may be applied - for example you may not be covered for medical conditions that have developed before the switch even if these were covered under the previous contract. If you do decide to change, make sure you do not cancel your original cover until you are fully covered by the new contract.
The Long Term Insurance cover policy can be set up under trust. This means that in the event of death, proceeds of the policy are paid directly to dependants of your choice. Provided a trust is set up properly, there may be benefits to doing this. Most Insurers proivde standard trust forms. However, using a trust may not be suitable for everyone and because of the complexities we recommend you may wish to seek legal life assurance advice.
What does my Long Term Insurance Life Cover Cost ?
This depends on several factors, such as the amount of cover you want and the length of the term. Naturally, it's also based on the likelihood of your insurer having to pay out: if you're a smoker and do a dangerous job, you'll pay more than a non-smoking office worker. Some might be cheaper than others, but they may not offer the same level of protection.
FOR PROTECTION PRODUCTS WE USUALLY OFFER FROM A LIMITED PANEL OF PROVIDERS