What cover do I need?

The term 'life insurance' is used to describe a number of different types of cover, each with its own features and benefits. Although they work in different ways and suit different people and different stages of their lives, they all have similar aims – to offer you and your family financial peace of mind and to help you protect your future.

Click on the profile below that best suits your current situation to see what type of life insurance might be best for you.


Single Person, no children

Whilst you don’t have anyone financially reliant on you, you are still reliant on your own ability to continue to work and earn to support your mortgage and your lifestyle. In the event of an accident or serious illness, your income could be significantly reduced if you only have state benefits to fall back on and even if you have employee sick benefits, these do tend to stop before the need for them does.


John

John is 25 and has just bought his first house.

He has a mortgage of £125,000 which is over 25 years on a repayment basis.

He is self employed, working as an IT consultant.


Need
  • A lump sum payment to clear his mortgage if he gets seriously ill
  • An ongoing income to allow him to maintain his lifestyle should be unable to work

Couple with no children

Whilst you don’t yet have any financial dependents, you may well be financially reliant on each other. Would mortgage and lifestyle costs be as manageable without both incomes? If the answer to this is no, then it would be a good idea to ensure that both incomes are protected, or at the very least, your outgoings can be reduced should the worst happen, be that death, or critical illness.

Ideally clearing or significantly reducing your mortgage is a good place to start as living costs would be much more manageable for your surviving partner without the expense of the mortgage.


Ian and Sarah

Ian (31) and Sarah (29) have just bought their first home.

Ian is a teacher on a salary of £35,000 and Sarah works in Marketing and earns £30,000.

Their mortgage is £170,000 over 30 years on a repayment basis.


Need
  • A lump sum to clear their mortgage if either of them were to suffer a serious illness
  • A lump sum to clear their mortgage if either of them were to die
  • An ongoing income to maintain their lifestyle and pay their bills should either be unable to work due to long term illness or accident

Couple with children

Whilst there are children at home your budget is always going to be stretched, however the need for protection is even greater as you and your home provide stability for your children as they grow up. Children are likely to be financially dependent on you for nearly as long as a mortgage term so it is important that this is factored into your protection planning. Reliance on one income or the cost of high childcare fees means that protection against the loss of income, however it occurs, is essential.

Ideally an element of all of these policy types is better than covering to the max in one or two areas – it really is a question of eggs and baskets.


Ian and Sarah

Peter and Janice are 35 and have 2 small children.

They own their property on which there is a mortgage of £135,000.

Peter earns £50,000 as an accountant and Janice is currently a full time mother.


Need
  • A lump sum to pay off the mortgage should either Peter or Janice die
  • A lump sum to pay off the mortgage should either Peter or Janice suffer a serious illness
  • A replacement income for Peter in the event that he is unable to work due to long term sickness or serious accident
  • A replacement income for Peter should he die

Single parent

As a sole household earner, it is down to you and your ability to continue to earn in order to maintain your mortgage and the lifestyle you want for yourself and your child/children. Loss of income through incapacity or serious illness could have a major impact on this. In the event of your death, who would look after your dependents and would you need some financial provision for this?


Lucy

Lucy is a single mother with a 2 year old daughter.

She currently has a mortgage of £60,000 on the property she is living in.

She works as a lecturer at the local university whilst her daughter attends nursery


Need
  • A lump sum payment to pay off the mortgage if she were to die
  • An income to provide for her daughter until she leaves university in the event that Lucy is not around to support her herself
  • A replacement income for Lucy if she is unable to work due to long term sickness or serious accident
  • An ongoing income to allow her to maintain her lifestyle should she be unable to work
  • Cover to maintain Lucy's mortgage payments should she be made redundant
Suitable policy

Retired couple

Whilst pension income will not be affected by long term incapacity or serious illness, it could cease or dramatically reduce in the event of one or the others death. If there are still financial commitments like mortgages to be paid this could be a problem on reduced income and even without this, the cost of the regular bills would still need to be met.


Fred abd Josie

Fred and Josie are both 68 and retired.

They have a small mortgage of £55,000 and both are in receipt of the state pension, although they mainly rely on Fred’s personal pension


Need
  • A lump sum to pay off the mortgage should either Fred or Josie die. Should budget not stretch to both, Fred, as the main earner, would be the priority
  • A replacement income should Fred die that would allow Josie to maintain her standard of living
  • An ongoing income to maintain their lifestyle and pay their bills should either be unable to work due to long term illness or accident
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