A life insurance policy is designed to provide a lump sum payment on death. This is usually required to either protect a liability (such as a mortgage) or to protect dependents and loved ones.

There are various different types of policies available and numerous insurance companies that specialise in this field.

Term Insurance - This type of policy runs for a specified time period with the following options usually available:-

• Level Term Insurance
  • In this form a policy will pay out a fixed sum on death during the term. At the end of the term the policy ceases with no maturity value. Nor does it acquire a surrender value.
• Convertible Term Insurance
  • These policies allow conversion, without further medical evidence, to a different type of policy from an insurance company's range. These may include whole of life, endowment, a further term, unit linked or family income benefit. On conversion to another policy the premium may increase or decrease dependent on product chosen.
• Increasing Term Insurance
  • Under this option, the benefit payable on death increases (usually annually) and are particularly useful to avoid the sum assured being eroded by inflation. The premium will increase each time the sum assured increases.
• Renewable Increasable Convertible Term Insurance
  • This contract combines the options of increasing the sum assured, converting the policy and renewing the contract. Policies are usually arranged on a five or ten year basis initially.
• Renewable Term
  • Level term assurance with an option to renew the contract at the end of the term, without the need for further medical evidence. On renewal the policy premium will increase as this is based on clients increased age. Some companies may reserve the right to ask for a blood test at renewal. Many companies allow repeated renewal (up to a maximum expiry age).
• Decreasing Term Insurance
  • The sum assured decreases each year throughout the term of the policy and this type of policy is especially suitable to protect a repayment mortgage.
• Family Income Benefit
  • These policies provide a regular tax free income to assist the remaining members of the family. As an income replacement, it is important to protect the benefits from the effects of inflation by having the benefits index linked.

Most insurance companies offer policies which can be extended to include not only life insurance but critical illness insurance.

Also, most insurance companies will offer a policy whereby the cover provided increases, normally in line with the Retail Price Index, to prevent the real value of the cover being eroded by inflation. The policy premium may rise each time the sum insured increases.

It is important to remember that not all life insurance policies are the same. With this in mind, expert advice and guidance is readily available from our qualified adviser at Independent Mortgage Network, by telephoning on 08456 44 70 55 or by post / email via the 'Contact Us' page.