NORWICH FINANCIAL ADVICE

PENSION ADVICE and RETIREMENT PLANNING

 

NFA Home

 

NFA Invest

  Phone  01603 452686

 

 

 

Home

Investments

Later Life Issues

Contact NFA

     

   Protection - Life Insurance/Assurance = Life Cover


Call: 01603 452686

 

       The one policy that you will never get any personal joy from

 

Topical Issues

 

Be Prepared

Life Insurance (Assurance) - Definition:

 

 

The term 'assurance' is used to describe a policy that is certain to pay out at some stage (e.g. upon death) whereas 'insurance' is used when a policy may pay out (e.g. home insurance, term-insurance etc.).   

 

Life assurance or Life Insurance is also known colloquially as 'Life Cover' or 'Whole of Life Cover'. 

 

 

Level Term Life Assurance is inarguably one of the cheapest ways to protect your family's income if the worst happens.

 

Level Term assurance is a life insurance policy that pays out to your dependents if you die, but note the two keys words: 1) Term: This means you only get a payout if you die within a fixed term e.g. 10 years or whatever else is written in the policy.

 

2) Level: This means that the payout which is made doesn't vary, it's always at a set pre-agreed amount.

 

Therefore, level term assurance guarantees a lump sum payout upon death within a fixed period of time

 

Whole of Life Assurance

 

Whole of life assurance is an open-ended policy often used for inheritance tax planning purposes and pays out a fixed amount when you die, rather than after a fixed period of time.

 

The Key Decision

 

If you're a single person with no dependents, then you most likely won't need life assurance and you will be far better off by focusing on your own finances.

 

For everyone else, the basic question to ask yourself is: 'What would happen financially to the people around me if I died?' - and perhaps: 'Do I care enough to do something about it!'.

 

If the answer is there'd be little financial impact, then you probably don't need a policy - but if your loved ones would have to struggle, then there is a strong reason to consider life assurance.

 

Payout and Cover

 

The payout should aim to pay-off any outstanding debts and provide your dependants with a reasonable standard of living.

 

If you are still in employed work you should check whether your employer already offers you any ‘death in service' benefits. Remember that cover may also be needed for your spouse.

 

The cost of cover, not surprisingly, increases with the likelihood of death within the stipulated term. So, a 98-year old, tobacco-chewing racing driver who likes to go cage-less shark diving, may struggle to find appropriate cover for herself.

 

It is worth noting that If you're over 50 and have (relatively minor) health issues (or you don't want to disclose them) an Over 50 Life Policy is an option as they generally do not require you to answer any health questions and there is guaranteed acceptance up to age 80 or 85.

 

Yet, to compensate for the lack of information they are MUCH more expensive and you can't claim in the first one or two years.

 

Couples can go for either separate or joint policies which pay out on the first death.

 

However a joint policy would only be suitable if you need it to pay out the same amount for both partners. Even if a joint policy does look suitable, it's worth getting quotes for standalone policies anyway, as it's often cheaper.

 

The Important Issue of Underwriting

 

Although you will see plenty of adverts everywhere with offers of Live Cover starting from £4.50 or less a month - do not be fooled.

 

Although these offers are genuine enough, they only apply to 21-year old, super-healthy females living entirely healthy lives without any exposure to any dangers by way of pastimes, travels, sport, employment etc. and preferably living on an Island without traffic, storms, lightning, heavy rain, excessive sun, heavy snowfall etc,

 

Why such people would consider life insurance is something one can ponder upon!

 

Anyway, for the vast majority of 'normal' people the actual life cover premiums will depend on a wide variety of factors; the most important being: age, health, family history, lifestyle, pastimes etc,

 

Any real, or perceived, factor that may impact on your lifespan will affect the price of cover that you will be quoted.

 

If there is evidence of more significant medical problems (or e.g. hazardous pastimes etc.) specialist underwriting may be required and the question of whether or not you can get cover will be determined based on an individual assessment.

 

Generally speaking, you need to be really quite ill to be refused life cover, but even if you can get cover, the premiums may be prohibitively high and may differ very significantly between providers. In such cases it is of particular importance to have contact to the right adviser. Norwich Financial Advice has contacts to a number of specialist underwriters as well as the full range of providers of 'ordinary' life insurance policies.  

 

Already got cover?

 

         Is it worth switching?

 

If you already have a level term policy it may well be that cheaper option (with the same level of cover) is available as prices have reduced significantly in recent years.

 

However if your existing policy was bought many years ago or you have experienced health problems since, the possible savings from switching to a cheaper policy may well be cancelled out by the fact your risk level has increased.

 

Life Insurance written in trust.

 

If you die, the payout from your life assurance will normally form part of your estate which means that it potentially may be liable for 40% Inheritance Tax.

 

In many cases it is possible to avoid this by writing the policy in trust, as long as this is done at the time the policy is taken out.

 

Doing this means that the insurance pays out directly to your dependents, so it never becomes part of your estate thus avoiding inheritance tax altogether and also helps to speed up the payout.

 

NOTE! In Feb 2011 the EU Court ruled that from Dec 2012 gender must no longer be factored into insurance costs meaning that life cover prices could rise sharply.

 

Until now, men have paid more for life insurance as their risk of dying within the term is higher than those of women (assuming similar age at the time of application).

 

So price equality now means that women's costs will likely rise and even though the rules don't change yet, as life insurance policies often last 20 years with guaranteed prices, price hikes are expected soon adding possibly as much as 10% to the cost of cover.

 

NFA has access to a wide variety of Life assurance providers and can help you in deciding upon the most appropriate terms and levels of cover.

 

FOR A FREE INDEPENDENT LIFE COVER QUOTE please feel free to contact NFA on the phone number or e-mail address found at the bottom of this page ▼ 

 

I don't want to retire right

now - maybe next year, or

the year after...

But, can I afford to cut down

on my work hours already?

     find out more 
 

Is it a good idea to buy an

Annuity now or is it better

to wait?

Should it be a single or a

joint annuity?

     find out more 

 
retired couple

What is the right way to

arrange my Investments?

How much risk can I

afford to take?

How much income can I get?

     find out more 
   

 

 

LET YOUR MONEY WORK FOR YOU!

 

 

 

 

 

 

 

 

VISIT THE DEDICATED NFA INVESTMENT SITE

►►
 

Don't be caught unprepared

 
     
 

    Specialist Advice Areas


     Regulatory and Legal changes

    LONG TERM CARE -  

  BE PREPARED...

Long Term Care is an issue that most of us would rather not think about. But should you, or your loved ones, need it later it can be VERY expensive if you have not prepared.

      Read More...

WHAT WILL I GET

FROM THE STATE?

Although you may be entitled to a full or partial State Pension it is important that you also get to know what other benefits and support you may be entitled to in your later years.  Read More...►

WHAT ARE POWERS OF ATTORNEY?

Not very many people are aware of what Powers of Attorney really are or How they Work? You need to know that they In many cases can be of critical importance in a difficult situation.  Read More...►

 

 PENSION CHANGES 2014

 
 

New rules allow increased flexibility for pension drawdown arrangements. But there are important aspects which need consideration.

   

   Read More...►

 

 PENSION CHANGES 2014

 
 

 

Is Income Drawdown a ticking time bomb?

Law changes and low Gilt yields can have a large impact on drawdown Portfolios.

 
1 2 3 4 5

   Read More...►

 

You are always Welcome

to contact NFA for a discussion

of your Life Insurance needs and

Obtain a FREE Quote

for the most appropriate Policy

 

Phone: 01603 452686

 

 

e-mail: info@norwichpensions.co.uk

 
     

 

 

 

 

 

Norwich Financial Advice Limited  is authorised and regulated by the Financial Conduct Authority

and is entered on the FCA Register under FCA reference: 706645

Norwich Financial Advice Ltd. is registered in England and Wales; Company No. 8533929.  

Registered office: 74 Muriel Road, Norwich NR2 3NZ, Norfolk, England.