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How much Term Life cover?
If you’re the breadwinner, you will want to keep your family in
something like the style to which they have become accustomed. If you’re
a carer, then you want to provide cash for professionals to take over
because you’re not around.
We reckon it’s either enough to produce around two thirds of your
earnings or £20,000 for professional care each year.
To work it out exactly for your individual circumstances,
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How Long to Cover For?
 Until
your dependents are old enough to look after themselves. We
reckon that 20 years is about right for most people. Or until
your savings can provide for you and your partner. We think
by the time you're 60 should do it.
Now you’ve worked that out, what’s next? We reckon the rest
of your questions are the ones on the left. You
choose.
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What types of Life Cover are there?
There are three types. If you want more detail click
on each one:
- You can simply protect those who depend on you against your death
by taking out Life Cover.
- You can be covered if you're diagnosed with a serious illness
like a heart condition or cancer. This is up to six times more likely
to happen to you than dying before age 65. This type of insurance
is called Critical
Illness Insurance Cover.
- You can protect against losing your income through disability,
no matter how it’s caused with Permanent Health Insurance
( also referred to as Income
Protection Insurance Cover).
Life and Critical Illness Cover can be bought together,
and in different ways:
- On a level basis - fixed premiums for a fixed number of years
and a full payout on claim at any point. Almost always the right
choice for family protection and "interest-only" mortgages
.
- On an increasing basis - costs more, but cover goes up every
year without any medical (and so does the premium). Not so popular,
but should be because people need more cover as inflation and their
income rises.
- On a decreasing basis - a cheaper option as premiums are lower
to begin with. Payout reduces over the cover period, in line with
a repayment mortgage. Not much good for anything else, but ideal
for those on a tight budget.
- On a renewable basis - a short term policy - which makes it cheaper
initially, but more expensive long term. Importantly, it can be
renewed without medical evidence.
Any claim can be paid as a lump sum, or as a monthly
income with Family Income Benefit.
You should seriously consider putting your policy
in Healthcare
Trust Fund (Not regulated by the Financial Services Authority).
This means that the proceeds of your cover will be paid in a straightforward
way to your dependants without affecting your will, your estate or the
taxman. PHAMoney does not charge for advising on and arranging trusts.
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How Are Premiums Calculated?
The
cost of life insurance depends on two factors: how much cover
you want and how long you want it for.
Then your age, sex, occupation, health and smoking
habits are taken into account.
The type of policy then makes a big difference. The
other issue affecting premiums is your medical history and current state
of health. If you have any concerns, please do call
us so we can advise on the most appropriate insurer for your circumstances.
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