Life,Insurance,Things,look,out finance, share, loan Life Insurance: Things to look out for when protecting your


If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that


The alarming fact that we all put to the back of our minds is that life can be taken from us at any moment. There are no guarantees on how long we have, and to base your financial decisions on the assumption that you are a modern day Methuselah is unwise, especially when other people’s wellbeing might also be affected should the worst happen.For most people, their mortgage is the biggest financial commitment they have. Mortgages are usually for large sums of money, set over long terms and are based on the assumption that you will live long enough to pay it off. But what if you don’t? If you have a mortgage and you die, your partner/spouse/family/housemate/goldfish/terrapin (delete as appropriate) would either have to find a way to continue paying, or lose their home and face a difficult move. Life insurance can repay the mortgage balance in full in the event of your death, and leave your loved ones in a more stable financial position.I’m sure that you will be comforted to know that life assurance (insurance and assurance rather confusingly mean the same thing here) is similar to other types of insurance, insofar as those who are the most likely to claim from it have to pay the most! Where it does differ however is the length of time it takes to underwrite the policy, which can often take several weeks if the insurer has to write to your GP.Factors that affect how much you pay include:
  • Age
  • Gender (ladies live longer than gentlemen. Sorry guys it’s true – I am convinced this is due to males being more inclined towards mustard-based foods!)
  • Weight
  • Occupation (if you work at heights like Superman, or drive a lot for work, you will pay more)
  • Lifestyle (if you smoke, drink excessively, travel to exotic countries, or in your spare time are a member of the Scunthorpe Synchronised Bungee Jumping Display Team – sorry, you’ll pay more)
  • Medical history (both yours and your immediate relatives’)
Many insurers will be able to give you a quick quote of how much your policy is likely to cost; but be prepared for that to increase if they take a more detailed look at your lifestyle and medical records as part of the underwriting process.What type of cover do I need?The type of cover usually used to cover a mortgage balance is term assurance, so-called because it will provide protection in the event of your death, but only throughout a specified term. When covering a mortgage, there are two types of term assurance to consider: Decreasing Term Assurance (DTA) is a type of insurance that decreases over a specified period, in line with how your mortgage balance reduces as it’s repaid. This cover should be used to cover a Repayment mortgage. Level Term Assurance (LTA) is a type of insurance that pays a level amount if you die within a specified period. This type of insurance should be used to cover an Interest Only mortgage, where your mortgage balance remains the same throughout the term. If your Interest Only mortgage is linked to an investment, such as an Endowment, you may have some cover already- check your paperwork to see if this is the case. A lot of Endowment policies are running at a shortfall, but don’t assume that your life cover on this only covers you for the amount your Endowment is projected to be worth, it is most likely set up to pay the amount the policy was originally expected to reach – which could be substantially higher!To cover your mortgage there are three key things you will need to know:
  • the type of repayment method
  • the term you have remaining
  • the current balance. When checking the amount you need to be covered for, be sure to include any fees that are going to be added to your mortgage balance. You are borrowing these too, so make sure the amount you are actually borrowing is protected by your policy!
  •  [If you are currently applying for your mortgage, all this information can handily be found in Section 3 of your Key Facts Illustration or Mortgage Offer]However, these aren’t the only things you need to think about when arranging life cover to protect your mortgage. Take a look at these tips, for other things you should be considering:
    • Shop around. The staple of any money-saving guide! Prices vary widely between insurers so don’t settle for the one your Bank or Building Society offer without getting some quotes to compare against.
    • Don’t just cover the breadwinner or main earner. If your partner doesn’t work, there is still a financial impact if they die prematurely.
    • Joint cover and single cover. It’s up to you whether you choose to cover yourselves singly, or jointly. In terms of cost joint policies are cheaper than two single ones, but only very marginally. For a little extra two single policies can provide double the cover of a joint one!
    • Consider writing your policy in trust. When you die, everything you own (your assets) is totalled up. If your assets exceed a certain threshold (at the time of writing £325,000 for a single person, or £650,000 for married persons or civil partners) your estate will be subject to Inheritance Tax. Your life insurance policy would form part of your estate. By writing it in trust this becomes outside of your estate; therefore you can ensure that the money goes directly to the person you want it to, without incurring any Inheritance Tax. If you are in any doubt about what to do seek professional guidance from an Independent Financial Adviser or Solicitor.
    • If you are on a budget and cannot afford the premium that the insurer offers you, why not try getting as much cover as you can for your money – at least you’ll have some protection. If you can only afford to pay £20.00 per month for cover, most insurers will let you specify this for a quotation and then return the amount of cover they will give you for this price.
    Like your mortgage, your should regularly review your life cover to ensure it still fully protects you, and that you are paying a competitive price. Make sure that you take your life assurance into account every time you remortgage, or change your mortgage in any way (for instance by borrowing more).

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