Life / Critical Illness Insurance
Most of us have heard of Life Assurance and appreciate that it is a policy provided by a Life Assurance Company that pays out either a lump sum or a series of payments if or when you die. These payments are normally paid without the deduction of any personal income tax, and in most instances are actually tax-free.
It is however worth considering that any proceeds from a life assurance will be added to the deceased’s estate. If this takes the overall estate above the nil band threshold for inheritance tax, this tax would be payable for any amounts in excess of the threshold. This can be avoided by placing the Life Assurance in Trust and therefore separating out these proceeds from the ‘estate’ and keeping them tax free.
The proceeds of a Life Assurance policy can be used to pay off a debt such as a mortgage or to provide an income for your dependents
You pay monthly premiums or an annual sum to the Life Assurance company for either a given time span or in the case of Whole of Life Assurance normally through to death (some Whole of Life policies have a maximum age limit on premiums).
Life Assurance policies can be combined with other forms of insurance, such as Critical Illness insurance so that you receive the lump sum if you are diagnosed with a specified critical illness or on death.
Level Term Assurance (LTA) - Provides a level lump sum on the death of the life or lives assured. If no death occurs in the term, then the policies simply lapse, with no value.
Decreasing Term Assurance (DTA) - Designed to provide for the repayment of any outstanding loan on a repayment mortgage. The payout will normally be made on the death of one of the mortgagees. There is no value to the policy once the mortgage has been repaid.
Critical Illness Cover (CIC) - Many people who suffer life threatening illness survive for relatively long periods due to the advances in medical care. Many people worry about the effects of a critical illness on the family's ability to maintain the lifestyle they have worked hard for. Critical Illness is a protection policy, which provides a lump sum (sum assured) on diagnosis of one of a specified list of illnesses, or on the permanent total disability of the life assured. We can help you to choose the most suitable company that covers the conditions that are of the greatest worry to you.
