Types Of Cover

A general term used to mean the same as Life Assurance. The difference is that in the insurance world they insure against something which might happen but they assure against some they know definitely will happen at some stage, i.e., death.

Term Life Assurance is the opposite of Mortgage Life Assurance in that the amount of cover remains the same throughout the term of the policy and does not reduce. This type of Life Assurance is suitable for those people with Interest Only mortgages, those wishing to cover funeral expenses and people wanting to leave a sum of money behind to ensure their families standard of living.

Policy usually pays out a lump sum or an income when the person insured dies.

It only pays out if you die within the term you’ve agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out on the first death only during the term.

Mortgage Life Assurance is used to protect your mortgage against the risk of you dying and leaving it behind for your family to continue paying.

Mortgage Life Assurance is only suitable for mortgages which are Capital and Repayment because the level of cover is designed to reduce as your mortgage reduces over the years.Assumes all monthly payments are made.

The reduction ensures that there is always enough in the ‘pot’ to pay off the mortgage if the worst happens but there will be very little surplus remaining.

Decreasing Life Assurance is a term used to mean the same as Mortgage Life Assurance. The ‘decreasing’ refers to the reduction in cover over the years.

It only pays out if you die within the term you’ve agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out on the first death only during the term.

Increasing Life Assurance is an extra option offered by most insurance companies which allows you to protect your Term Life Assurance policy from the effects of inflation. Each year you will be offered the opportunity to increase your amount of cover inline with the retail price index without any further need for medical information.

This allows your policy to retain its real value over the years so your family receive a payout of equivalent value in years to come.

Index Linked Life Assurance / Index Linked Life Insurance.

Another term used to refer to the increasing life assurance option offered on term life assurance policies.

Critical illness cover is an important financial safety net. It’s designed to pay out a fixed cash amount if you’re diagnosed with a defined critical illness under the policy during the term of the policy.

Critical Illness Cover is designed to pay out on diagnosis of certain life-threatening or debilitating (but not fatal) conditions such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs. The illnesses covered will be specified in the policy along with any exclusions and limitations – these differ between insurers.

Critical illness policies usually only pay out once, so are not a replacement for income. You can use the payout to pay for medical treatment, pay off your mortgage or anything else.

Serious illness cover pays out tax free lump sum if you are diagnosed with a specified serious illness or permanent disability during the term of the policy.

The amount paid out is based on the severity of the illness and its impact on your lie. This means you could receive a payout at an earlier stage of your illness.

For less severe illnesses you may only receive a portion of your sum assured