What is Death in Service?
This is normally a benefit for an employee that has been put into place by their employer. In many cases, the plan will take effect when you start work within the company but with some, the benefit will only come into force after a set amount of time in service.
A death in service plan is often free to the employees of a business, however in some cases you will have to pay a contribution to the service. As death in service plans are a company benefit, the company is in control of the plan; the company will choose your sum assured and the term of your plan and the death in service plan can be withdrawn at any time, subject to the terms and conditions of your contract and the death in service plan will usually cease if you leave the employment.
The death in service plans are often set up in a discretionary trust which means you do not get to choose who acquires the benefit in the event of your death.
It is advised that you should never rely on a death in service plan due to the nature of its unpredictability and the fact that it can be withdrawn at any time. A death in service plan should be viewed as an employee benefit or an addition to an existing plan but not as your only form of life insurance protection.
With death in service plans, as they are group life plans, any pre-existing life medical conditions should not affect the cost.
Life Insurance policy types
There are four variations of life insurance plans to choose from, these are;
A level term plan, which means that your sum assured remains the same and does not change throughout the term of the plan. There is no relevance to what you owe on your mortgage the plan will still pay out the same regardless.
A decreasing term plan is where your sum assured will decrease throughout the term of your plan, usually in line with your mortgage. A decreasing term plan is more suited to people who have repayment mortgages. This life insurance plan is the cheaper option when compared to a level term plan.
An increasing term plan is when the sum assured increases in line with the Retail Price Index (RPI).
The family income benefit plan pays out a monthly income, rather than a lump sum payment in the event of your death which will mean that every month your family can feel reassured that if you are no longer around, they will still have a source of income from you to help support your family almost as if your wages are still being paid.
If you are to cancel any of these plans there will be no money issued back to you and the plan will cease to exist, meaning that your family will no longer be covered, should the worst happen to you.
It is dependent on your personal circumstances as to which plan or plans would be the most suitable for you.
Please do not hesitate to speak to a Proadvice financial adviser today to discuss your options.
What type of Income Protection do I need?
Some people may try to embellish their income when it comes to taking out income protection but an insurance company will not pay out more income than you are entitled to. Income protection will usually cover a maximum of 50% of your annual salary. At the point of any claim, if you cannot prove your income then the insurance company will only pay what it is proved that you are entitled to.
Whereas you should not over insure yourself, it is also highly advisable that you do not under insure yourself either. If you are unable to work and on long term sick leave then you will probably be surprised by how much money you will need to just get by, even if you were to cut down on any luxuries.
Probably one of the most common and usually the most important repayment that you will need to be cover will be your mortgage or rent payment. If you are ill, you still will need to have the income you need to keep a roof over your head. The bills will still need paying too, just imagine, the last thing you will need if recovering from a long term illness will to be sat in a dark or cold house because you have been unable to pay your bills. Another matter to be taken into consideration is food which is of course vital; you will be surprised just how many people forget to take this into consideration yet your diet can have a vital role in helping to aid your recovery.
What is Critical Illness cover?
Critical illness insurance is a long term insurance policy designed to pay a lump sum or monthly income on the diagnosis of certain life threatening or debilitating, (but not fatal), conditions such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs.
Once a successful claim has been paid out, it is completely at your discretion to use the money as you see fit. This could be to pay off your mortgage, covers your bills while you are off of work, protecting the family or paying to have private treatment. In some cases the money could even be used to change your home to suit your new circumstances, such as adding a wheelchair ramp. The choice is completely down to you and your own circumstances.
It is usually more cost effective to take out life and critical illness cover plan together than to take out critical illness cover on its own. Critical illness cover is more expensive than life cover on its own due to the fact that you are seven times more likely to claim on a critical illness policy than you are on a life insurance policy.
At Proadvice we compare offers on the insurance market from over 100 different polices and our aim is to find you the best plan on the insurance market based on your individual circumstances. At Proadvice, we have a team of experienced and dedicated financial advisers, who will take the time to understand your circumstances, explain the selected policy in detail and in an easy to understand way, this means no confusing insurance jargon. Proadvice will ensure that they have answered any questions you may have and check that you are completely satisfied with the policy that you have selected to take out before you commit yourself to it. Being advisers at Proadvice, we can also recommend the plans that only qualified advisers are able to recommend, for example, if you have unique circumstances, such as previous medical history or you have what is classed as a ‘dangerous occupation,’ such as working at heights, Proadvice can find the right insurance company for you that will cover you for these conditions. At Proadvice, we have the authority to search the whole of the market place, unlike some other financial advisers who are tied into one insurance company, for example an estate agency or a bank. Proadvice guarantee that not only will we find you the best policy to suit your requirements but we will also find you the best price available for the standard of cover you require.