Will my premiums change?
Most term insurance policies are arranged on a guaranteed premium basis meaning that your premiums will stay the same over the policy term. This is often not the case with Whole of Life policies and with Indexed Linked cover where the premiums will rise to reflect the higher sum assured.
Care must be taken as many insurers also offer ‘reviewable’ premiums that will typically rise throughout the policy term, usually every five years.
Is the pay-out taxed?
Pay-outs from Life Insurance are exempt from Income Tax or Capital Gains Tax, although they are subject to a potential inheritance tax liability. This can be mitigated by writing the insurance policy in Trust, which removes the proceeds from the deceased’s estate. Speak to our advisers to understand the full benefits of writing a Life Insurance policy in Trust.
Sole or Joint Life policy?
A Joint Life policy is typically cheaper because if will only pay out once, usually on a first death basis and will often be arranged to cover a joint mortgage. However, there are potential pitfalls, if the survivor still wants cover they will need to take out a new policy, when they are older which will mean higher premiums and they may have suffered some ill health which could make getting the cover harder or costlier still.
Taking Single Life policies is often more cost effective as the difference in premium is often marginal and you effectively get twice the amount of cover for very little difference in price. Having individual policies is usually advisable if you have children and want to maximise the potential security for your family