Life insurance

What is the purpose of a financial review?

Life insurance helps to give your family financial protection should you pass away at any time within the lifetime of the policy. There are two aspects to life cover
- The amount of money you would like to leave behind (the lump sum)
- The length of time you want the cover to last.
Once that’s been decided, you simply pay a regular monthly amount until the policy ends. In the unfortunate event that you die within the lifetime of the policy and you maintained all monthly payments, the lump sum is paid to your family.

How can the lump sum be used?

The lump sum can be used in any way you choose to help support the living standards of your family. For example, it could be used to help pay off an interest only mortgage, contribute towards the family’s living costs or other monthly outgoings including rent.

Does the lump sum or monthly payment change?

Cover can be set up on a decreasing, level or increasing basis, depending on your requirements.

Decreasing term – This is normally used to cover debts or obligations that reduce over time, such as a mortgage or business loan, because the death benefit decreases in line with the outstanding debt. It's a cost-effective option for people with specific financial needs that diminish over their lifetime, like those with families who will become more financially independent over time.

Level term - This is where the sum insured (the death benefit) and the monthly premiums remain constant for the entire duration of the policy. This policy type is ideal for covering expenses like a fixed-sum mortgage, replacing lost income, funding long-term living costs for dependents until they are independent, or providing a fixed inheritance. It is best suited for situations where the financial need is a fixed amount that doesn't decrease over time,

Increasing term – This is normally used to provide an inflation-adjusted death benefit over a fixed term, protecting the payout's real value and helping to cover future costs like rising living expenses or large financial goals. This policy type is ideal for individuals who expect their financial responsibilities to grow over time, such as young families, or for those who want to ensure a substantial legacy that won't be eroded by the cost of living increases.

Critical Illness Cover

What is Critical Illness Cover?

This is an insurance policy that offers financial protection should you become critically ill during the lifetime of the policy and which pays out a tax-free lump sum that you can use in any way you choose.

How does it work?

When you choose level cover, which ignores the effect of inflation, you decide the amount to be covered and the period of the cover. The amount covered by the policy (the lump sum) and the amount you pay each month will stay the same until your policy terminates. Level cover good be a good option if you wish to maintain the living standards of a loved one.

Examples of how the lump sum may be used?

The lump sum may be used to cover the following -

• Your lost salary while you convalesce and recover
• Additional healthcare and living costs
• Rent payments
• Mortgage payments
• School fees or childcare costs

Income Protection Insurance

What is Income Protection Insurance?

This is an insurance policy that will provide a monthly payment in the event that you become ill or injured and cannot work. The policy will pay a proportion of your lost earnings to help cover monthly outgoings while you concentrate on convalescence and recovery.

How will I be paid?

This insurance will provide you with either a fixed monthly benefit amount or a percentage of your earnings following the deferred period. The benefit amount can be paid for each eligible claim for a set period of time. Claim periods can range from 12 months until retirement age 70. Longer claim periods will be more expensive that shorter options.

There is also a deferment period. This means the length of time you must be unable to work due to illness or disability before the policy starts to pay out your regular income benefit. This is a waiting period that you can choose when the policy is set up. Different insurers may offer different options, but common options are 4, 8, 13, or 26 weeks. The longer the deferment period, the lower the monthly premium will be, as the insurer doesn't have to pay out as quickly.

Examples of how benefit payments are used?

• To replace part of any lost salary
• Pay for essential bills such as your mortgage or rent
• Additional healthcare and living costs
• School fees or childcare costs
• Food and utility costs

Help & Information

If you would like further information on how E&G can help you arrange family protection, please call us on 020 8396 0486 or email us at cds@eandgfs.com.