Protection

How does life insurance cover work?

Life cover is a type of insurance that pays out a lump sum or income if you die while the policy is still in force. Most commonly life insurance cover is taken to ensure your mortgage will be repaid, so that your family can afford to continue to live in your home. You might also set up a policy to protect your loved ones; for instance, to provide enough money for your family until your youngest child reaches adulthood. Life insurance is usually for a set term – to coincide with the length of your mortgage, or a life event (your youngest child’s 18th birthday, for example). If you die within the term, the policy will pay out; however, if you survive the term, you don’t get anything back. The cost of your life insurance policy can be paid monthly or annually.  Be sure to keep up your payments – if you miss one, your policy may be placed “off risk” which means you’ll have no cover. Life insurance providers sometimes offer a “premium waiver” which pays your premiums if you can’t work due to ill health. Protect your home, family and lifestyle with cover that pays a lump sum of money, providing financial stability to you and your dependents.
Whether you’re looking to cover a mortgage and loans, or provide your loved ones with a financial safety net, we can provide you with quotes for term life cover from a range of life insurance companies. 

What is income protection insurance?

Income protection insurance is a long-term insurance policy to help you if you can’t work because you’re ill or injured. It replaces part of your income if you can’t work because you become ill or disabled. It pays out until you can start working again, or until you retire, die or the end of the policy term – whichever is sooner.

There’s a waiting period before the payments start. You generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly payments. It covers most illnesses that leave you unable to work, either in the short or long term (depending on the type of policy and its definition of incapacity). You can claim as many times as you need to, while the policy lasts. It’s not the same as critical illness insurance, which pays out a one-off lump sum if you have a specific serious illness. It’s not the same as short-term income protection, which also pays out a monthly sum related to your income, but only for a limited period of time (normally between two and five years) and can cover fewer illnesses or situations.

Critical Illness Cover

Being diagnosed with a serious illness can cause a lot of anxiety – even if it’s at an early stage or of a less severe form. You may have to take time off work for treatment, which can cause stress and financial worries. Critical illness insurance, otherwise known as critical illness cover, is an insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.

The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation. The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed. The survival period used varies from company to company, however, 14 days is the most typical survival period used. The contract terms contain specific rules that define when a diagnosis of a critical illness is considered valid. It may state that the diagnosis need be made by a physician who specialises in that illness or condition, or it may name specific tests, e.g. EKG changes of a myocardial infarction, that confirm the diagnosis. In some markets, however, the definition of a claim for many of the diseases and conditions have become standardised, thus all insurers would use the same claims definition.

The standardisation of the claims definitions may serve many purposes including increased clarity of cover for policyholders and greater comparability of policies from different life offices. For example, in the UK the Association of British Insurers (ABI) has issued a Statement of Best Practice which includes a number of standard definitions for common critical illnesses. There are alternative forms of critical illness insurance to the lump sum cash payment model. These critical illness insurance policies directly pay health providers for the treatment costs of critical and life-threatening illnesses covered by the policyholder’s insurance policy, including the fee of specialists and procedures at a select group of high-ranking hospitals up to a certain amount per episode of treatment as set out in the policy.

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