Life insurance can pay your dependents money as a lump sum or as regular payments if you die.
It is designed to provide you with the reassurance that your dependents will be looked after if you are no longer there to provide.
The amount of money paid out depends on the level of cover you buy. You decide how it is paid out and whether it will cover specific payments, such as mortgage or rent.
There are two main types of life insurance:
Over 50s Life Insurance gives you the reassurance that when you die, you are leaving a fixed, tax-free cash lump sum for your loved ones to help with your funeral costs. These plans are designed for people of poorer health who cannot get a medically underwritten term life insurance policy. These plans usually have no health questions and are guaranteed acceptance upon application. With this being the case the insured must live for 2 years before the plan will pay out, if the plan owner dies within the first two years all premiums will be returned by the insurer.
With a standard funeral plan, you pay for your funeral in advance, at today's prices. You can pay the plan provider in either a lump sum or instalments. You can buy a plan from most funeral directors.
Funeral plans vary in terms of what is included. All plans include the services of a funeral director who takes care of the deceased, arranges the funeral and organises transport.
However, there are differences with the additional services that plans offer. Some may provide high-quality coffins, access to view the deceased in a chapel of rest, and limousines to transport guests to the funeral. Other plans may be more basic.
As well as the core costs of the funeral director and coffin, funeral plans will also include - or make a provision for - third-party costs. These can include the cost of using a crematorium, doctors' fees and the cost of a minster or celebrant. These third-party costs are usually called ‘disbursements. Funeral plans are usual paid off in full over a maximum of ten years.
Critical illness insurance provides you with a lump sum of money if you are diagnosed with certain illnesses or disabilities.
The kinds of illnesses that are covered are usually long-term and very serious conditions such as a heart attack or stroke, loss of arms or legs, or diseases like cancer, multiple sclerosis or Parkinson's disease.
If being ill has left you out of pocket, it can be really handy to have a large sum of money to spend on things like everyday expenses, paying off your mortgage or your medical expenses. You can use the money in any way you like, you don't have to spend it on anything in particular.
You may have other income coming in while you're ill such as state benefits or sick pay from your employer. However, this may not cover all your needs. It's a good idea to think about how much you would need to live on if you became seriously ill and whether you would need some extra money to boost your income.
The question of whether or not you need income protection insurance isn't likely to come up often, partly because we don't like to think about something going wrong, but also because it's all just a bit dull.
And anyway - isn't that what life insurance and even its cousin critical illness insurance is for? The majority of us will have to take some form of protection out at some point in our lives - whether to give us peace of mind that the mortgage will be repaid, or to ensure the family finances are secure if one or other breadwinner becomes too ill to work or worse.
But what many consider the most worthwhile form of protection insurance - one that pays you a monthly income if you are unable to work - has flown under the radar for the majority of people. Income protection insurance, also known as income replacement, protects your monthly income if you can no longer work due to injury or illness.
It has never been a best-seller - partly because it is seen as complex, more expensive and pays out on a monthly basis instead of as a one-off lump sum.
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Landlord insurance is home insurance designed for rental properties, often combined with other insurance options for landlords. It includes one or more of: