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Life assurance or Life cover is a way of providing protection to cover you and your family against the financial consequences caused by death.
In most cases, Life assurance is usually arranged in connection with a mortgage, to provide a means of repaying the outstanding balance should the borrower die during its term.
Life assurance can also be arranged for many other reasons, such as to provide a lump sum for family members or to provide cover for loans and businesses.
Life assurance can be arranged on either a Decreasing basis, Level term basis or to Increase in line with the Retail Price Index (R.P.I.)
With Decreasing cover, the amount of protection will reduce gradually, during a specified term. This type of cover is usually the cheapest and most common type of Life Assurance and is typically arranged in-line with a Repayment mortgage, so that that amount of Life assurance only covers the outstanding balance of the mortgage as it reduces over its term. Decreasing cover can be arranged on a single-life or joint-life basis.
With Level cover, the amount of protection remains constant throughout its term, guaranteeing to pay a specified lump sum in the event of death. Again this cover can be arranged on a single-life basis or a joint-life basis. This type of cover is more suited to an Interest-only type of mortgage, where the balance of the loan does not reduce or to provide protection for family members.
If you chose indexed cover, the amount of protection will gradually increase annually, in-line with the Retail Price Index.
The cost of Life Assurance is calculated using a number of factors:
- The type of cover chosen
- The amount of cover chosen
- The term of cover
- Your age
- Your gender
- Your health and medical history
- Your occupation
- Any lifestyle habits and activities you may participate in.
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