Life Insurance FAQs

Q: Why on earth would anyone want a decreasing term policy if it pays out less and less each year?

A: The reason would be to pay off a decreasing amount like a loan or a repayment mortgage. A level term insurance policy could also be used to pay of a mortgage with the lump sum that is paid out.

Q: What is the difference between Life Insurance and Life Assurance?

A: In short Insurance covers the death with a pay out but has no cash-in value.  Assurance has an investment element and will provide a pay out at the end even if the policy holder is still alive.  Assurance also has a cash-in value although penalties for early cash-in usually apply.

Q: If I take out a decreasing term insurance policy will it get cheaper as the years go by?

A: The premiums, the amount you pay out, will not get less they will stay at the same amount as they are at the start. However, in real terms if you have the policy for many years inflation will mean that the amount you are paying in real terms will be worth less.

Q: I have high blood pressure and I take medication will this make a difference to my premiums if I take out a life insurance policy?

A: In most cases yes it will.  It may also make it difficult to find an insurer who will cover you.  High blood pressure is one of the factors that insurance companies use to asses your risk.  Compare all the providers and check the policy details to see what is available to you.

Q: I find it hard to think about life insurance because it seems expensive to be paying every month are there any other benefits other than the pay out?

A: It’s always a matter of personal choice but many people would say that the peace of mind they get from knowing that their family is provided for after their death is a benefit.

Q: Will I already be covered in my mortgage protection policy?

A: Your mortgage repayment may be covered it depends on what policy you have, but it is unlikely that your family will also receive a lump sum pay out in excess of the mortgage unless you have a level term element to your policy.

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