Choosing the right plan

If you wish to leave a lump sum to pay off either an interest only mortgage, or to assist loved ones, then a Level Term policy may be the option you’ll wish to take. A definition of a Level Term policy is as follows. With a Level Term assurance policy the amount of cover will always remain the same. The premiums will also be fixed, and providing they are always paid on time and in full, upon death the policy will pay out a lump sum.

Or maybe you are looking to cover your repayment mortgage, if that is the case then a Decreasing Term policy may be more appropriate. With a Decreasing Term policy the premiums are fixed for the life of the policy, though the amount of cover decreases in accordance with the reducing balance of a repayment mortgage. Because the amount of cover that you are insured for reduces over the term of the policy the price may be cheaper than that of a Level Term policy.

Perhaps you are concerned about being diagnosed with a serious illness in which case Critical Illness Cover maybe of interest to you. Critical illness policies will pay out a lump sum in the event that you are diagnosed with a defined critical illness, i.e. one that is covered on the policy. The various companies all cover a different number of illnesses, so we recommend you read through the providers “Key features” documents to ensure that the policy you choose covers precisely what you are after.

All of the policies do cover the Association of British Insurers core critical illness conditions as a requirement. You can either take this policy with Term assurance attached, or opt to take it as a standalone (on its own).

One point worth considering is that whether you choose to take a standalone Critical illness policy, or to combine it with a Term policy there is virtually no difference in price.

If you still have any doubts as to which policy is right for you, you should always seek advice from a financial adviser.