Mr K.L. Asks:
I have started a new job and unlike my previous company they do not provide any staff benefits at present. The one I am concerned about is Life Assurance as I am married and have two young children. What type of policies are available and would you have a specific recommendation.
Peter Sharratt Answers:
I do not know enough about you to determine which type of policy would be right for you I can however summarise your options. Broadly speaking there are two types of Life Assurance Policy to consider. The first is a Whole of Life Policy which has no set expiry date (hence the title). This type of policy will have the highest premium for any given level of sum assured (cover) but as a result it MAY accrue a surrender value in future. The premiums and sum assured are normally reviewable which means you may have to increase the premiums in future to maintain the sum assured at the same level or reduce the sum assured to the keep the premium the same.
The second type of policy is Term Assurance. This has a fixed term as determined by you at outset and the longer the term the higher the premium. The premium and sum assured once accepted are normally guaranteed i.e. they will not change. Please be aware though that there are some policies which are reviewable. There are a wide range of Terms Assurances available including a Level Term Assurance where the sum assured remains the same for the duration of the policy. A Decreasing Term Assurance where the sum assured which will reduce over the term of the policy and a Family Income Benefit Policy where the sum assured in the event of a claim is paid as a regular income rather than a lump sum.
All of the above will allow you to add further features generally for extra cost such as Waiver of Premium which means if you are unable to work due to accident or ill health the premium after a pre-agreed waiting period will be paid by the insurer. It is possible to have the sum assured increasing each year to help combat the affects of inflation (the premium will also increase). Most policies include Terminal Illness at no extra cost meaning that if you are diagnosed with an illness likely to result in death within 12 months they will pay the sum assured out early. This benefit is not normally valid in the last 18 months of the policy term.
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Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.