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Be prepared if life has a nasty surprise in store

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During Male Cancer Awareness Month leading protection insurer, The Co-operative Insurance, is urging both men and women to look at the range of life assurance plans available and protect themselves against a variety of life-altering events.

 

The Co-operative Insurance lists some useful tips when finding the right life insurance plan, who should take them out and the pitfalls that should be watched out for:

 

Level Term Assurance

Pays a fixed amount on death within the term of the policy. This is the most basic form of life assurance and can be one named person or the first in a couple to die. The cover does not depend on stock market reductions, so there is no chance of a huge rise in premiums after a few years. However, there is nothing to be paid out at the end of the term of the plan.

 

Decreasing Term Assurance

Pays an amount that reduces over the term of the policy. Usually intended to coincide with the reducing balance of a capital repayment mortgage, though people may have to increase the level of cover if they add to the size of their loan later on. Bear in mind, however, that term cover gets more expensive as you get older.

 

Income Benefit Assurance

On death during the term of the policy. Provides a quarterly income to help support loved ones who are left behind. These policies work very well for families with children. For example: you have a child that is 5 years old and you want to be sure that your spouse and child are taken care of in the event of your death. Your family will need to have sufficient cash on hand to not only meet the day to day needs of life, but to also have enough for your child's education. This can be a substantial amount of money. The premiums for this type of policy are also very affordable. Typically, employees receive sick pay for a period of time, they should find out how long this would last for if they are ill and are unable to work and if it is not long enough, then they can top it up with an individual plan.

 

Whole of Life

Provides a guaranteed lump sum should a person die at any time, no matter how long they may live. The cover is linked to stock market investment performance so a person could get back more or less than they put in.

 

Income Protection

A person could be safe in the knowledge that their family could maintain their current lifestyle - whatever happens. If a person were unable to work, they would have peace of mind that their family could be financially secure. Earnings protection will give a regular, tax-free income to spend how they like - up to 50% of their earnings. Expenditure protection can pay any major bills, such as the mortgage and they can still receive state benefits to which they are entitled.

 

Critical Illness

Pays a one-off, tax-free lump sum, on survival 28 days after diagnosis of a specified critical illness during the term of the policy. This lump sum could provide for any outstanding mortgage or loan payments, medical care, the cost of adapting a home or car or to cover expenses for time off work to recover. Serious illnesses, such as cancer or a heart attack hit one-in-four women and one-in-five man before retirement age. Critical illness plans can be combined with life cover, so if a claim is made on the critical illness plan, a claim can also be made on the life cover.

 

Fiona Jackson, Head of Protection at The Co-operative Insurance, says: "It is so important for both men and women to evaluate their financial needs should disaster strike. Early death or a serious illness can hit the healthiest of us at any time with difficult decisions and financial considerations often being left to family and friends to sort out."

 

Income protection insurance: News update: June 2008

 

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