Insurance is a product designed to protect you against financial loss in the event that something unexpected happens. It is common place for people to ensure items and belongings that are of a high value, either in terms of their financial or sentimental importance to a person.
Unlike most other types of insurance, drivers in the UK are required by law to possess car insurance that covers them for the car they are driving. The Road Traffic Act 1988 says that you must have some kind of insurance or protection against liability to third parties in the event that personal injury is inflicted upon them, or that their property is damaged, as a result of your use of the road. By being insured, the car driver protects innocent parties against costs that could be inflicted from injury, death, damage, theft and legal costs.
Protecting your home is vitally important – after all it is probably your most financially valuable possession. There are generally two types of home insurance – buildings and contents.
Convertible term assurance policies are similar to term assurance policies, as they have a known level of cover that will pay out in the event of death within a set time. However they also come with the option to "convert".
A critical illness plan pays out a lump sum if you are diagnosed with any of the policy's specified critical illnesses, but survive for a period of time after diagnosis (normally 28 days). The lump sum you get could be used to pay for things like nursing care, home-help or adapting your house to accommodate a disability.
Family Income Benefit is an innovative type of life insurance product, which is useful and extremely good value when compared to some other types of life or health insurance.
Level term life assurance is seen as a ‘safe’ option. When you take out the policy you agree a term length with the insurance provider, as well as an amount you wish to have paid to your estate in the event that you die during the agreed term. In a sense it is a type of insurance you never want a payout from, but it also an extremely useful and simple way of providing your family with future financial security.
Mortgage protection, otherwise known as mortgage payment protection insurance (MPPI), is a product designed to pay your mortgage repayments in the event that you lose your regular income. There are a variety of different types of mortgage protection insurance on the market, and they will all have different conditions within them.
Whole of life cover pays out a lump sum in the event of death, no matter when it happens. There is no specified period. Whole of life policies are generally used to provide security for a family, and are especially suitable for Inheritance Tax Planning.
Choosing and applying for life insurance can be a confusing process. Unlike most other insurance policies, many people go into the application process unaware of what they are actually looking for, and how to get what they want.