Life Insurance companies have a number of differenct policies to cater for different events, there are some polices which are based of your life whilst others are based on property or employment. It is prudent to understand the meaning of all the financial products out there so that if you do come accross unscrupulous sales people you will be able to hold your ground. Here are the main types of financial protection cover.
LIFE INSURANCE
Provides a lump sum on the death of the policy holder, depending on the policy there may be a guaranteed payment or if the basic level term assurance policy is taken out then the life assured can only receive the lump sum if they die during the life of the policy.
INCOME PROTECTION INSURANCE
Provides a regular income when the insured is unable to work due to accident or illness, the payments that are made are usually lower than the salary and decreases over a number of cycles to ensure that the plicy holder activley looks for work when they are fit.
CRITICAL ILLNESS COVER
Provides a lump sum if the life assured is diagnosed as suffering from one of the listed critical illness. These critical illness are determined by the life company and range from paralysis to strokes, the more illnesses you have the higher the premium becomes.
MORTGAGE PAYMENT PROTECTION INSURANCE
Provides a regular income to cover mortgage repayments if the insured is unable to work due to illness, accident, redundancy or unemployment. The payments are level and only last until the policy holder is able to find paid employment.
PERSONAL ACCIDENT AND SICKNESS INSURANCE
Provides a lump sum or income benefits if the insured falls ill or has an accident, premiums depend on the type of employment you have or the lifestyle you live, stuntmen will have to pay a greater premium compared to office workers.
LONG TERM CARE INSURANCE
Provides cover towards the costs of long term care due to old age or infirmity. Premium depends on how healthy the policyholder is at the time of taking out the policy, a fitter person usually pays less than a person who has a long medical history.
SUMMARY
Bear in mind that it is possible for different types of cover to be provided by one single contract. For example term assurance can include critical illness cover as a option. Make sure you have adaquate cover and find out if you are insured for the same cover more than once – you will be paying more premiums than you need to. The best way to assess this is to seek the advice of a Independent financial advisor who will be able to assess your existing polices and provide you with the right cover at the right price.
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