There are few guarantees in life. Death and taxes may very well be the only two certainties, as Benjamin Franklin pithily surmised. Any anxieties you might have about either of these cheery topics can be greatly alleviated with the purchase of personal insurance. The three best-known types of protection are life insurance, critical illness cover and income protection. Here, Acumen answers your frequently asked questions about each.
Let’s kick off proceedings with a whistle-stop tour of life insurance.
What is life insurance?
Life insurance, also known as life assurance or life cover is a type of personal insurance that safeguards your loved ones financially if you die. It gives peace of mind that your family will be cared for long after you’re gone.
How much is life insurance?
The cost of your life insurance depends on your circumstances. To give you a gauge, if you’re aged 18-29 the monthly cost of a life insurance policy could be less than three Lotto tickets. Read our blog on the subject.
How does life insurance work?
Life insurance is essentially an agreement made with an insurance company. They agree to pay a certain amount of money to your dependents after your death, provided your premiums are paid and up to date.
Critical illness cover
Now let’s find out more about another type of personal insurance: critical illness cover.
What is critical illness cover?
Critical illness cover insures individuals against serious illness. It pays a one-off, tax-free lump sum to help with a mortgage or other debt payments. Once the insurance company has paid out the policy ends.
What illnesses are covered by critical illness insurance?
The types of critical injuries or illnesses covered will change depending on the policy. But typical examples of critical illnesses include: heart attack, stroke, various types and stages of cancer, and multiple sclerosis.
How much critical illness cover do I need?
Consider what would need to be paid in the event of serious illness, such as your mortgage. Then assess your savings and eligibility for benefits. This will give you a ballpark figure but speak to a financial adviser to be sure.
Finally, allow us to answer some of your burning questions about income protection.
What is income protection?
Income protection provides financial assistance if you’re unable to work due to injury or illness. Unlike critical illness cover, income protection replaces part of the wage until you’re able to work again.
What does income protection cover?
Income protection covers most illnesses and injuries that stop you working. That can be either in the short or long term. It’s worth noting that it doesn’t pay out if you’re made redundant.
What is group income protection?
Group income protection schemes are set up by employers. They aim to provide an income to employees who are unable to work long term because of an illness or injury. Payment usually starts after a deferred period.
We hope that provides some much-needed clarity on the topic of personal insurance for you!