What is Personal Insurance?
Life Insurance
Life insurance provides a lump sum payment to your loved ones if you pass away, helping them maintain financial security when it matters most.
Income Protection
Income protection insurance replaces a portion of your income if you’re unable to work due to illness or injury, helping you keep up with everyday expenses.
Critical Illness Insurance
Critical illness insurance pays out if you’re diagnosed with a specified serious condition, offering financial support to help you focus on recovery.
Family Income Benefit
Family income benefit insurance pays a regular, tax-free income to your family if you pass away during the policy term, helping them manage ongoing living costs
Personal Protection FAQs
More about Life Insurance
Level
Level-term insurance covers you for a period of time (the term) and the amount is a fixed lump sum of money which is left to your benefactors, if you pass away during the term of the policy.
Decreasing
Decreasing cover is a type of insurance plan that is often (but not always) bought to clear a specified debt such as a mortgage. The value of the sum of money insured decreases over the term of the policy, typically inline with the value of the debt.
Increasing
An ‘index linked option’ allows the policy benefit to increase on an annual basis. This helps to offset the effects of inflation. Most policies can be arranged to increase in line with the retail price index, or in the case of some insurers, by a specific percentage per annum.
Joint Cover
Joint life policies are often chosen by couples. You choose an amount of cover, which is paid out in the event that one of you passes away during the length of the policy. The surviving partner will then receive the sum of money. The policy will then end on pay out.
Whole of Life
Whole of life insurance covers a person for their whole life. If your health deteriorates, your premium won’t be affected. However, these policies are often more expensive than others.
Over 50s
An Over-50s plans tend to offer a smaller pay out to cover things such as funeral expenses, the amount you pay for your premium is guaranteed so it won’t go up or down.
The cost of the monthly premiums is determined by several factors, including how long the cover lasts, your age at the time the policy starts, your health, your lifestyle and your family medical history.
Hobbies that may be considered to be dangerous, such as mountain climbing, diving or flying can affect premiums as well as hazardous jobs and activities that you may be required to do as part of your employment.
During the application process you will need to complete a medical and lifestyle questionnaire where you will be asked about your health and circumstances, after which the insurer will then confirm the cost of your monthly premiums.
The amount of cover that will be suitable for you will depend on your personal circumstances. Typically, the amount of cover that is right for you will be based on covering a specific financial commitment, such as a mortgage balance, or an amount of money you wish to leave to your benefactors/dependents to support them with day-day living costs.
You may wish to take out a small plan to cover funeral expenses.
The ideal length of the policy can vary depending on your personal circumstances and also the reasons for why you have taken out the cover. If you are looking to cover against a specific liability such as a mortgage, then you may wish for the term of the cover to match the remaining term of your mortgage, so that the balance of the mortgage is always covered.
Alternatively if you are looking to support your children while they are still young, then you may wish the term of the policy to run until they are at a non-dependable age.
Or you may want the term of the policy to run until you reach a certain age, such as your expected retirement, or when you have planned that your financial commitments will reduce.
There are many reasons to consider putting your life insurance into a trust, including protecting your beneficiaries from inheritance tax or helping to avoid probate.
A trust is a simple legal arrangement that allows you to gift your life insurance policy to someone else (the beneficiary). It is a good way to ensure that your life insurance is not considered to be a part of your estate when you die, so your beneficiaries won’t face the worry of inheritance tax on your life policy.
If you have a joint life policy then both of you must agree to place your policy in trust.
Putting your life insurance plan into trust, means that you give your policy to the trustees who then legally own your policy and look after it for the benefit of your beneficiaries. You are still responsible for paying the insurance premiums, but the trustees will be responsible for keeping the trust deed and any other documents safe. They make the claim on your policy and ensure that the money goes to your beneficiaries as you intended.
More about Critical Illness Insurance
Critical illness cover pays out a lump sum if you are diagnosed with a condition that is described in your policy.
The three most common conditions that claims are for:
- Cancer
- Heart Attack
- Strokes
Many policies will cover you for between 40 and 120 conditions depending on the insurer. Other common conditions that are claimed for are – Multiple Sclerosis, loss of vision or hearing, loss of limbs, HIV Infection, Motor Neurone Disease.
No one knows if or when they will be affected by a serious or critical illness and being unable to return to work or the stress caused for you and your family by having to take time off from work to recover. This can put extra pressure on you as you worry about meeting financial commitments such as your mortgage or paying the bills.
Critical Illness insurance can be a valuable support if you are unfortunately diagnosed with a serious illness and are unable to work. The cover pays out a lump sum that you choose how you wish to use it. You can use it to repay a mortgage, pay your day-to-day bills or help with your recovery and treatment.
If you don’t have savings, critical illness cover can provide valuable financial support in the event that you become seriously ill.
Don’t assume that if you don’t have dependants you don’t need cover. If you live on your own, for example, you will need to ensure any rent or mortgage commitments are paid each month. You don’t want to have to worry about keeping up with your financial commitments when you are unwell, recovering from injury or adapting to incapacity.
- You are diagnosed with a critical illness
- You make a claim directly with the insurer, you may need to supply medical evidence of your diagnoses
- The insurer will then pay-out the claim, once this is complete the policy terminates
- You use the pay-out how you wish
The cost of the monthly premiums is determined by several factors, including how long the cover lasts, your age at the time the policy starts, your health, your lifestyle and your family medical history.
An insurer will assess your risk of suffering a critical illness and will typically look at these main areas:
- Age – You are at a higher risk of suffering a serious illness the older you are
- Medical history – insurers will want to know about your previous medical history to know if you have suffered from illness in the past.
- Family – Insurers will also want to know about your family’s medical history, including serious illness and ages your family suffered from these conditions.
- Your current health – some factors that will considered when determining the monthly premiums are – what is your height and weight, do you currently or have you been a smoker, how much alcohol you regularly drink, any drug use.
Children’s Critical Illness cover is offered by a number of insurers as an addition to your critical illness plan. Some insurers will even offer this cover included at no extra cost.
Many plans will cover natural, legally adopted and stepchildren, as well as any children that you may have in the future.
Typical the child must be aged between 30 days and 18 years old, or 21 if in full time education.
When a child is diagnosed with a critical illness or has an accident, the parents often have to take time off work, or even leave work, to focus on looking after them. Typically this involves daily hospital visits, child care for any other children in the family, or making adaptions to the home or family car, all of this can have a huge emotional and financial impact.
Children’s critical illness cover can help reduce any extra stress by supporting with these additional costs.
More about Income Protection
Income Protection insurance pays an agreed monthly benefit if you are unable to work due to long term sickness or injury. This can be particularly useful if your employer does not provide an adequate sick pay scheme.
The monthly benefit can be used to help to maintain your lifestyle and make sure that your financial commitments such as mortgage and bills are paid.
You can receive up to 70% of your regular (pre-tax) monthly income depending on the plan that you take out.
If you are unable to work due to sickness or injury, you may only be entitled to Statutory Sick Pay (SSP), therefore an Income Protection plan can supplement an income until you are able to return to work. If you do not have an Income Protection plan in place you may have to rely on savings to cover living costs while you are unable to work.
Income Protection insurance is very beneficial if you are self-employed and do not have a sick pay scheme.
Yes. The amount of benefit you are allowed to take will be based on your annual income. You may be required to prove your annual income during the application process.
You will also need to complete a medical and lifestyle questionnaire as part of the application and disclose any dangerous or hazardous activities you are required to do as part of your job.
- You are unable to work due to long term illness or injury, and are signed off work by your GP or other medical professional.
- You make a claim directly with the insurer, who may require you to provide a GP sick note.
- The insurer will start paying your monthly benefit after the policy deferred period has been reached.
- Your policy will pay out until you return to work or until the policy pay out claim length.
Deferred Period
The deferred period is the length of time between being unable to work and when the insurer will start paying the monthly benefit. Deferred periods can range from as soon as 1 week up to 12 months. As an example a policy with a 4 week deferred period will commence payments once you have been off work for a period of 4 weeks.
How long the deferred period should be will be determined by a number of factors, for example, does your current employer offer any additional sick pay benefits, do you have any other sick pay arrangements, how long you can survive with reduced income, do you wish to use any savings. Typically the longer the deferred period is on the plan the cheaper the monthly premiums are.
Claim length
You can choose a plan with either a short or long term claim length.
Short-term income protection is designed to cover you should you be unable to work due to injury, or long term sickness. The period of claim is for a fixed amount of time, usually one, two or five years.
Long-term income protection is designed to cover you should you be unable to work due to injury, serious or terminal illness. Pay-outs will continue until you return to work or when the policy expires – usually when you reach retirement, or at the end of a fixed period.
Amount of benefit
Dependent on the insurer, you are able to cover anywhere between 50% to 70% of your income.
Waiver of premium
With waiver of premium you won’t have to pay your policy premiums during periods when the income protection policy is paying you benefits.
Premium Basis
- Guaranteed premiums – the monthly premium cost will remain the same throughout the term of the policy.
- Reviewable premiums – the provider may increase the monthly premium cost during the term of the policy. Providers will review your premiums periodically, although typically most providers will not change the premiums within the first 5 years.
- Age-costed premiums – the monthly premium will increase every year at the start of the year or on the anniversary of the plan or your birthday (provider dependent). The rate of increase is dependent on the level of benefit, your age, and your chosen deferred period.
You can choose a plan with either a short or long term claim length.
- Short-term income protection is designed to cover you should you be unable to work due to injury, or long term sickness. The period of claim is for a fixed amount of time, usually one, two or five years.
- Long-term income protection is designed to cover should you be unable to work due to injury, serious or terminal illness. Pay-outs will continue until you return to work or when the policy expires – usually when you reach retirement, or at the end of a fixed period.
More about Family Income Protection
You receive a regular monthly payment if the person insured dies within the term of the plan.
The amount of the monthly payment is set from the outset of the plan. This would normally be the income your family would need to be financially stable should you pass away. The payments will continue for the remaining term of the plan. For example if you passed away after 10 years of a 30 year term, the plan will continue to payment out for the next 20 years.
Family income benefit is generally seen as the most budget-friendly form of life insurance available.
This is because the insurer is less likely to have to pay out a significant sum, and even if they do they won’t need to pay it all in one go.
Before you take out a family income benefit plan, you should consider:
- How much income your dependants will need? You should consider possible future family living costs as well as your current outgoings.
- How long you want the cover to last? Often, people will choose the policy term to run until their children are financially independent.
- Frequency of pay-outs. When setting up the plan you will need to decide whether you would like your family to receive a regular monthly income, or a lump sum payment
Yes, it’s possible for family income benefit to be written in trust.
This can ensure that any pay-out is kept separate from the rest of your estate. This should allow your beneficiaries to receive the payment sooner, as it avoids the probate process, and won’t be subject to inheritance tax.
Experience you can trust
To discuss your requirements and the options available, book a call (no obligation) to speak to one of our team.