Life Insurance – Overview

A plan designed to help financially protect the life assured and their family. It pays out the amount of cover on death or diagnosis of a terminal illness (if the life expectancy is less than 12 months) of the life assured during the term of the plan. The amount of cover remains the same throughout the plan term.

Premiums are guaranteed.

Target market

Family

Where a lump sum is required to help provide financial support to a spouse, partner, registered civil partner or dependant in the event of death or becoming terminally ill.  

Mortgage

Where there is a need to protect an interest only mortgage with a policy that pays out the same lump sum throughout the length of the policy in the event of death or terminal illness.

Business

Where a lump sum is required to:

  • Cover the loss of a key person.
  • Purchase the shares owned by a director or partner.
  • Cover an interest only business loan.

Suitable if customers

  • Want to take advice on the suitability of the product
  • Want the level of cover to remain the same throughout the term of the policy.
  • Need a lump sum in the event of death or terminal illness and have dependants, and are not willing/able to self-insure or do not have funds elsewhere.
  • Have a business need to cover the loss of a key person, to provide finances to purchase shares of a director or partner in the event of their death, or to cover an interest only business loan.
  • Have medical conditions that do not prevent provisions of cover and are happy to be underwritten.         
  • Are UK resident and can afford monthly premiums for term cover.
  • Want their premiums to be guaranteed.  

Unsuitable if customers

  • Wish to purchase direct without advice
  • Want their policy to decrease.
  • Want a product to pay a monthly benefit if they are unable to work for a period of time.
  • Want a product to pay a benefit if they are unable to work for a period of time due to accident or injury (IPB).
  • Do not have a business need to cover the loss of a key person, to provide finances to purchase shares of a director or partner in the event of their death, or to cover an interest only business loan.
  • Have health conditions that may result in cover not being issued.
  • Do not need death, critical illness or Terminal Illness cover / without dependants, and are willing to self-insure and have sufficient funds elsewhere.
  • Require a non-underwritten journey.
  • Are unable to afford term cover and are not a UK resident.
  • Want their premiums to be reviewable.

Amount of Cover

  • No minimum sum assured. Driven by minimum premium.
  • No set maximum sum assured - subject to negotiation with re-insurers, except if Critical Illness Cover or Critical Illness Extra are chosen, when maximum amount of cover will be:
    £3 million - if Specific Work Tasks definition is chosen under TPD, or
    £2 million - if Own Occupation definition is chosen under TPD.
  • The amount of cover remains level throughout the policy term.

Term

  • The minimum term allowed is 1 year (without Terminal Illness Cover)
  • The minimum term allowed is 2 year (if Critical Illness Cover or Critical Illness Extra are chosen).
  • The maximum term allowed is 50 years (or 40 years if Critical Illness Cover or Critical Illness Extra are chosen).

Age restrictions

  • The minimum age to take out a policy is 18. It is possible for a life of another policy to be taken out on a 17 year old by an adult with insurable interest. This policy can then be placed in an Absolute trust with the 17 year old as a beneficiary.
  • The minimum age at the end of the policy is 29.
  • The maximum age for buying a policy is 77 (or 67 if Critical Illness Cover or Critical Illness Extra are chosen).
  • The policy must end by their 90th birthday (or 70th birthday if Critical Illness Cover or Critical Illness Extra are chosen).

Premiums

  • Guaranteed
  • Choice of guaranteed or reviewable premiums if Life Insurance with Critical Illness Cover or Critical Illness Extra is chosen.
  • Payable monthly or annually by Direct Debit.

Benefits automatically included at no extra cost

If the policy is mortgage related then the following is also included

Other information

  • For joint life policies, benefit is paid on the first death.
  • Policies can be placed in trust.