What is life insurance?
A life insurance policy helps protect your loved ones financially if the worst were to happen or you get ill. Your family will get a cash lump sum they can use to cover costs such as funeral expenses, debts or household bills. If you have a partner, children or any other dependents that rely on your income, then life insurance is for you. Most people will choose to take out life cover at key life moments including having a baby, getting married or nearing retirement. If you are a homeowner or in the process of buying a home, it is also a good idea to think about life insurance to cover your mortgage. This means that if you die before you have paid off your mortgage, then your family don’t need to worry about the monthly repayments.
What are the different types of cover?
There are four different types of life insurance we offer to help protect the things that mean the most. You can choose just one or, depending on your needs, combine them together for a more comprehensive policy.
Life Cover - Pays out a cash lump sum to your family if you die. You can either take out term life insurance which covers you for a fixed amount of time (like the length of your mortgage) or whole of life insurance that gives you lifelong cover with a guaranteed pay out on death.
Relevant Life Plan - a similar policy to Life Cover but is paid by the Ltd Company and is tax efficient saving you 40% on your premiums. The Policy will also go into Trust which means a pay out on death protects the Policy from Inheritance Tax. One of the most popular policies for business owners.
Serious Illness Cover - Pays out a cash lump sum if you are diagnosed with a serious illness. Unlike a typical critical illness policy, we pay out for the less severe conditions as well as the more critical ones
Mortgage Protection Cover - Helps you to pay your mortgage if you get ill or you die before your mortgage is paid off
Income Protection Cover - Pays you a monthly income if you get sick or injured and can't work.
Why should I buy life insurance?
For many people, life insurance is an excellent way to protect the things that matter the most – such as making sure your family’s financial future is more secure if something unexpected happens to you. It can also help to protect financially against critical illnesses, the loss of income if you get ill, or to ensure your mortgage repayments are covered if anything were to happen.
How do you work out the price of my life insurance?
Your premiums are based on lots of things, such as your age, height and weight; your health; whether you’re employed in a high-risk occupation; and whether you smoke. Cover with VitalityLife can start from just £9.50 per month but can change depending on such things as the amount of cover you need, the amount of time you want to be covered for, any pre-existing medical conditions etc.
Can I add Critical Illness Cover to my policy?
We do not offer Critical Illness Cover, we offer Serious Illness Cover, which is different as it pays you out for less severe conditions as well as critical ones. Serious Illness Cover gives you a percentage of your cover amount based on the severity of your condition. This means we are able to pay out on a wider range of illnesses - not just the debilitating or life-threatening ones covered by typical critical illness policies.
With us, you can include Serious Illness Cover with Life Cover or take it on its own. The level of Serious Illness Cover you’ll need depends on a few things, so we recommend talking to a VitalityLife adviser first.
Can I change my policy if my circumstances change?
Yes. If your circumstances change you can increase your cover or buy extra policies. You can also choose to add indexation to your plan at no extra cost. Indexation protects you against rises in the cost of living, making sure you always keep the level of cover you need and increases your cover each year without the need to go back through our application process. You can also choose to opt out of any future increases.
How long should my life insurance cover be for?
It is entirely up to you. We offer a minimum term of five years and a maximum term of your entire life. Most people will align their length of time with when they expect their mortgage to be paid off. You can then continue to reassess your protection needs as your life circumstances change.
Do I need to have a medical exam before I take out life insurance?
Not necessarily, but you must tell us about any medical conditions as part of your application. If you don’t suffer from any conditions you may not need to have a medical.
How much life insurance cover do I need?
This will vary depending on your personal circumstances and can be anything between £10,000 and £10,000,000. Have a think about:
How much is left to pay on your mortgage
How much other debt you have to pay
How much you would need to pay towards childcare or education
How much your loved ones would need to maintain their lifestyle
How much you may need if you get a critical illness
How much you can afford
If you are new to life insurance it can be a good idea to get tailored advice from a qualified financial adviser. Our expert team can offer free no-obligation advice. Click here to contact us.
What is the difference between level, decreasing and indexed life insurance?
This is used to determine the structure of your plan and the value that it is worth over time. The monthly premiums you pay may change depending on this.
Level cover means that the value of your plan stays the same over time. It will only change if something happens such as you make a claim or change your cover.
Indexed cover means that the value of your plan will increase each year to align with inflation and rises to the cost of living.
Decreasing cover means that the value of your plan decreases over time. This may align with decreases to your mortgage amount as you continue to pay it off.
Your Whole of Life options
We have four options of cover for you to choose from, so you can decide how your future premiums will change.
Traditional Whole of Life Insurance gives you a basic annual premium which you can choose to keep the same over time
Whole of Life Insurance with Premium Optimiser offers you an upfront discount and certainty of future price changes with an annual 2.5% fixed premium change
Whole of Life Insurance with Interest Rate Optimiser offers you an upfront discount and a variable annual premium change of between 1% and 2.75%, based on the Long Term Interest Rate, allowing you to benefit if interest rates rise in the future.
LifestyleCare Cover is Whole of Life Cover that gives you the ability to use some or all of their life cover early if they can't look after themselves.
If you would like to know more about how The London Tax Company can assist you with your Life Insurance please click here and complete our contact form or call us:
London Office: +44 07887948464
Sevenoaks Office: +44 07956860443