A life assurance policy will pay out on death, either a lump sum or income.
What types of policy are available?
Under a Level Term Assurance policy a lump sum is paid if death occurs within a specified period of years.
Under a Decreasing Term Assurance (Mortgage Protection) policy the sum assured reduces each year and is used to provide cover for a repayment mortgage.
A Whole of Life policy runs, as the name implies throughout life, and is ideal for Inheritance Tax and Estate planning.
An Income Benefit policy will provide a regular income if death occurs within a specific period of years.
How much cover do I need?
As a general guideline we recommend the following:
- Life assurance cover of no less than the amount of your mortgage plus:
- If you are the sole breadwinner, and you have dependent children, a lump sum of up to 10 x your income to protect your family.
- If you are not the sole breadwinner, and have dependent children a lump sum of 5 x your income and that of your partner.
How long do I need cover for?
Once again as a guideline we would recommend the following:
- Until your children can provide for themselves.
- For at least the length of your mortgage.
- Until your savings, or pension can provide sufficient guaranteed income for yourself and your partner.
The precise type of cover, amount and term, will obviously depend on your own personal circumstances.