Protecting and insuring your family

Protecting and insuring your family

You will need to think about what happens when you either become ill/injured and are unable to work or how your family will support themselves if you die.

Not everyone needs life insurance (also known as life cover or life assurance). But if your children, partner or other relatives depend on your income to cover the mortgage or other living expenses, then the answer is yes - you probably do want life insurance.

If you don't have the savings or a comprehensive sick pay cover from work you will still need to continue to pay your bills - this is where you may want to consider an income protection policy.

When looking at life insurance and protection policies it is very important to look at your personal circumstances and investigate what cover you already have in place via your employee benefits or any other policies you may have.

Life insurance

A life insurance policy will cover your death and as such is only payable to your dependents when you die. Most policies have exclusions and many will exclude pre-existing medical conditions.

Life insurance policies come in two forms: term assurance policies and whole of life policies. A term assurance life policy will run for a fixed period of time, such as 5, 10, 25 years - you are only covered if you die during the term of this policy. A whole of life policy will pay out no matter when you die as long as you have kept paying your premiums.

You can find out more information about life insurance and where to buy it here »

Income protection

These policies are long-term insurance policies which are designed to support you if you can't work due to getting ill or injured.

Income protection policies cover part of your income and only pay out whilst you are unable to work until you either return to work, retire or the policy expires. You usually have a delay on payments being paid to you; this is usually when your company sick pay ends. The amount you pay in premiums depends on the amount of income you want to cover and how soon the policy commences after you are signed off work.

Critical illness cover

These policies are also long-term insurance policies; however they will pay out a tax free lump sum in a one off payment if you are diagnosed with a serious illness or suffer an injury which is covered by the policy. These policies pay out once and then they end.

Both these policies are only worthwhile if the policy matches your individual needs and circumstances. This is why it is usually a good idea to speak to a financial adviser about which policy is best for you and to ensure that you are covered for the outcome you need the policy for.

You can find out more information about whether you need life insurance or critical illness cover by following this link to the Money Advice Service website here »

You can find a professional adviser local to you here »