1. Amount of Cover
This is the amount that will be paid if the policyholder
dies during the insured period. The typical policy in the UK is currently £140,000
over 25 years. For a normal ('level term') policy this amount will not change
during the insured period. To cover a repayment mortgage a 'decreasing term'
policy is available to provide cover which will decrease in line with the balance
of the mortgage.
2. Critical illness cover
This pays out the insured amount if you are diagnosed with
one of the specified Illnesses. Not all Life companies cover the same Critical
Illnesses and you should read and check the company's Key Facts and other documentation
carefully to ensure it is suitable. Critical Illness tends to be 3-4 times more
expensive than Life Insurance.
3. To cover mortgage
This type of policy is designed to cover the duration of
your mortgage and in the case of a repayment mortgage the cover will decrease
in line with the balance of the mortgage. This is generally a cheaper option
as the cover is decreasing.
4. Guaranteed Fixed Repayments
A Guaranteed Policy means your monthly premium payments
will not change during the insured period. The alternative is a Reviewable premium,
which is generally Guaranteed for the first 5 years, after which monthly premiums
could change (and possibly increase) at the discretion of the Life Insurance
company.
5. Are you a Smoker?
Most insurance companies define a smoker as someone who
has used tobacco during the previous 12 months; this includes nicotine patches
and chewing gum. A simple medical test can detect whether you have smoked in
the previous 12 months.