| Life Insurance is one of those things we try not | | | | an endowment policy is a savings plan with a |
| to think about, as nobody likes thinking about their | | | | decreasing term assurance policy that runs |
| own death or making plans for it. The truth | | | | alongside the savings plan. The savings plan is |
| however, is that making sufficient provision for | | | | arranged with the expectation that it will grow to |
| loved ones and dependents whilst still alive, is the | | | | a sum sufficient to repay the mortgage at the |
| best thing we can do to protect them from | | | | end of the term. The monthly premium is |
| financial strain or hardship in the future. | | | | calculated accordingly. In the same way as a |
| Life insurance comes in many different forms, | | | | decreasing term assurance policy will guarantee to |
| and can become somewhat confusing just with | | | | repay the outstanding mortgage balance in the |
| the different terms 'Insurance' and 'Assurance'. To | | | | event of death for a repayment mortgage, the |
| simplify matters the following guide should help | | | | same principle applies to the endowment policy. |
| you understand the differences. | | | | As the savings increase in value the insurance |
| When it comes to the difference between | | | | sum assured reduces, with the combined amounts |
| insurance and assurance, there is no real | | | | always being sufficient to repay the mortgage in |
| difference, although the most common term is | | | | the event of a claim. |
| Life Insurance. The subtle difference however is | | | | What other options are available? |
| that insurance is taken out to cover a future | | | | Critical Illness Benefit |
| event that may happen such as with a car | | | | With all policies you will have the option to add |
| insurance policy, where as a life assurance policy | | | | additional benefits. The main one of these is |
| provides cover for an event that will definitely | | | | Critical Illness Benefit which covers various |
| happen such as death. | | | | different critical illnesses such as Heart Attack, |
| In the case of death, both types of policy pay | | | | Stroke and Cancer. Different providers have |
| out a defined lump sum to the named beneficiary, | | | | different definitions, and so exclusions, limitations |
| and with the addition of critical illness cover to a | | | | or restrictions will be applicable to most policies. A |
| policy, would pay out the same sum prior to | | | | typical limitation of cover will be for some of the |
| death if diagnosed with a terminal illness or critical | | | | less advanced cancers that are more readily |
| illness covered by the policy. | | | | treatable. |
| What types of life insurance are available? | | | | The following represents the basic list of illness |
| There is a wide variety of insurance policies | | | | covered under a critical illness policy - Alzheimer's |
| available in the market, but when looking to | | | | disease, Aorta graft surgery, Aplastic anemia, |
| protect your mortgage the following policies are | | | | Bacterial Meningitis, Benign brain tumour, Blindness, |
| the main ones to be considered. | | | | Cancer, Cardiomyopathy, Chronic lung disease, |
| Mortgage Life Insurance | | | | Coma, Coronary artery by-pass surgery, |
| Policies designed to repay the mortgage in the | | | | Creutzfeldt-Jakob disease, Deafness, Dementia, |
| event of death or diagnosis of an earlier critical | | | | Heart attack, Heart valve replacement or repair, |
| illness fall into two categories. The first is a | | | | HIV or AIDs from an assault, blood transfusion, |
| 'Mortgage Life Insurance' otherwise known as a | | | | occupational duties or accident, Keyhole heart |
| Decreasing Term Assurance, and the other is a | | | | surgery, Kidney failure, Loss of independent |
| Level Term Insurance otherwise known as a | | | | existence, Loss of limbs, Loss of speech, Major |
| Term Assurance Policy. | | | | organ transplant, Motor Neurone disease, Multiple |
| Decreasing term insurance | | | | Sclerosis, Paralysis/Paraplegia, Parkinson's disease, |
| This type of policy is set up to pay out a lump | | | | Stroke, Third degree burns, Total and Permanent |
| sum sufficient to repay the outstanding balance of | | | | Disability. |
| the mortgage in the event of death or earlier | | | | Waiver of premiums |
| critical illness. This type of policy is used alongside | | | | In the event that you are unable to work due to |
| a standard repayment mortgage where the policy | | | | ill health it is possible to insure your monthly |
| reduces inline with the reducing mortgage balance. | | | | insurance premium. So that in the event of an |
| There is no investment element of any type with | | | | accepted claim premiums would continue to be |
| this policy, and so it simply pays out the agreed | | | | paid until the end of the policy, a specified age, or |
| lump sum upon acceptance of a claim. If you | | | | you become fit to return to work. |
| survive the policy term, then there is no payment | | | | How much does suitable Mortgage Life Insurance |
| made. | | | | Cost? |
| Level term insurance | | | | This depends on the individual life insurance |
| The only difference with a level term assurance | | | | companies underwriting criteria. Each provider |
| policy is that the sum insured does not decrease | | | | applies different criteria to their quotes, which is |
| over the policy term. This type of policy can be | | | | why some policies are cheaper than others. The |
| suitable to run alongside an interest only mortgage | | | | main factors that govern the cost of life |
| where the mortgage balance remains constant | | | | insurance are: |
| because no capital is repaid in a monthly basis. As | | | | Age, gender, height and weight, medical history, |
| with a Mortgage Insurance policy, the level term | | | | history of family health, marital status and the |
| insurance policy requires the payment of a | | | | number of children you have, your occupation, |
| monthly premium. In event of a claim the insured | | | | whether you are a smoker or non-smoker, any |
| lump sum is paid out the the nominated | | | | dangerous sports you take part in such as sky |
| beneficiary. | | | | diving, alcohol consumption, and the purpose of |
| Low Cost Endowment Life Insurance | | | | the insurance. |
| Whilst this is referred to as an Insurance policy, | | | | |