We know that your family mean the world to you, so it's natural to want to put plans in place to protect them at a time when they could need it the most. Having life insurance cover arranged by Mortgage Advice Bureau offers you reassurance that your loved ones won't be left paying your bills if the worst were to happen to you.
Income protection cover is designed to pay you a monthly income, which could be used to pay your mortgage, rent, bills or other household expenses should you fall seriously ill or have an accident which stops you from working during the length of the policy.
There are two main types of life insurance cover; term insurance and whole of life cover.
Term insurance cover
Term insurance provides cover for a set period of time, either to tie in with a mortgage or to run for a specific time when you no longer require the cover. Term insurance can be written on a decreasing, level or increasing basis (more info about this can be found here) and the benefit can be paid out as a lump sum or on a monthly/annual basis (known as family income benefit). Term insurance will pay out on your death as long as it's within the term of the policy, however nothing is payable if your death occurs after the policy expires. Term insurance can be written on a 'single life', 'joint life - first death' or 'joint life - second death' basis (again, more info about this can be found here).
Whole of life cover
There is no set term on whole of life cover as the policy can run for as long as you're alive and paying the premiums. If you want to ensure your family will receive a lump sum then whole of life cover is likely to be for you, as one will be paid upon your death. Just like term insurance, whole of life cover can be written on a 'single life', 'joint life - first death' or 'joint life - second death' basis, however it's only available on a level or increasing basis. Whole of life cover is generally more expensive than term insurance as you're guaranteed that your family will receive money whenever the time comes.
There are other types of cover which are usually purchased alongside term insuranceand whole of life cover; these are critical illness, serious illness and income protection cover.
Critical illness cover
Critical illness cover will pay out if you are diagnosed with a critical health issue such as cancer, a heart attack or a stroke, plus many other medical conditions. The number of medical conditions and the terms in which you'll be paid out varies for each insurer so make sure you read the small print before taking out this cover. You can choose if you want the cover to increase or decrease during the term, which is set by yourself. Once the lump sum has been paid, the policy will usually end. However, for less serious critical or serious illnesses, sometimes the insurer will make a partial payment, which means you will still receive the balance of the benefit should you suffer from a more serious condition later.
Serious illness cover
Serious illness cover is similar to critical illness cover, where if you're diagnosed with a serious health issue, the insurer will pay out a lump sum. This type of protection tends to cover many more illnesses that traditional critical illness cover but payment will be on a severity basis. Be aware that serious illness cover will pay the benefit out on a severity basis. Therefore for more severe conditions, the payment will be higher.
Income protection cover
Statutory sick pay is currently £96.35 per week - is that enough for you to continue paying bills as well as the general cost of living whilst you're in recovery? With an income protection policy, you can rest easy knowing that a percentage of your normal earnings will be covered if you suffer injury or illness during the term of the policy. Check the terms of the policy as income protection may only cover a percentage of your lost income and you may not be able to claim until the policy has been in place for a set time.
Mortgage Payment Protection Insurance (MPPI) is a type of cover which was created to cover the cost of your mortgage payments if unemployment, sickness or an accident prevents you from working.
Mortgage Advice Bureau expert advisers will help you calculate how long your savings would last and whether you would need this cover. The first aim of MPPI is to ensure that you keep your home or property and the second aim is to maintain yours and your family’s standard of living.
If you'd like to find out more information about life insurance, critical or serious illness cover, income protection or MPPI, or you would like to get a quote, visit your nearest building society branch and speak to an adviser at Mortgage Advice Bureau.
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