A Beginner’s Guide to Life Insurance

Life Insurance is there to ensure your family is financially secure should something happen. But knowing that is just the start…

What exactly is Life Insurance?
For a surprisingly affordable monthly premium, Life Insurance delivers the peace of mind of knowing that should you die, your family will either have a lump cash sum, or a regular income, which can be used to pay off an outstanding mortgage or support them with paying monthly bills.

Term Life Insurance is the simplest and most affordable type of Life Insurance, designed to protect you for a set period of time. This is normally used to cover the mortgage, which is itself often limited to around 30-35 years. If you die during the policy’s term then you will receive a pay out, if you live beyond this point then the policy will end.

What are the different types of Term Life Insurance?
There are various types of Term Insurance, designed to deliver the most suitable cover for you.
Family Income Benefit: Instead of a lump sum, this policy will pay out a regular income to help cover monthly payments and bills.
Level term: The amount of cover and total pay-out remains the same for the policy’s term.
Decreasing term: The total pay-out will reduce over the term of the policy. This can be suitable to take out alongside a decreasing loan such as a mortgage.
Increasing term: The amount of cover and premiums increase over the term. This can be suitable to combat the rise in inflation and the cost of living, as well as changes in circumstances.

What is an impaired life?
This is a term used to describe someone whose current circumstances would cause the underwritten premiums to be higher than a standard application. This can include not just medical and physical conditions, but the lifestyle or occupation of the applicant as well.

An application may be impaired for several reasons. This can include pre-existing medical conditions, hazardous occupations, or those that take part in high-risk hobbies. If you think you may have an impaired life, we can work through the provider options with you, as there are several that specialise in this area.

What else do I need to know?
It is often a good idea to buy Critical Illness Cover alongside Life Insurance, to ensure a comprehensive level of protection. Critical Illness Cover will provide a cash lump sum, should you be diagnosed with a critical illness such as cancer, heart attack or stroke. Life and Critical Illness cover can either pay on a first instance basis, or on the event of both diagnosis and death.

Life Insurance policies can also be written into Trust, which means it will not form part of your estate and therefore not be liable for Inheritance Tax (IHT). It is important to get tax advice before making any decisions regarding your tax options, but we can point you in the right direction.

If you would like to discuss your life insurance options then speak to one of our advisers today!

Do you know what your credit score is?

Your credit score can affect your ability to borrow money or access products such as credit cards and loans. Everyone can check their credit score for free. One of the easiest ways to check your score is through an online agency such as Experian or Equifax. If it looks like your score isn’t as good as it could be, don’t worry, there are ways you can improve it!

How can I improve my credit score?

  • Register on the electoral roll – if you are not registered to vote then you will probably find it harder to get credit. It is easy to register on the electoral roll by post or online.
  • Correct any mistakes on your file – it is important to check all your details are correct because even a small mistake could have an impact on your score. It is also important to ensure all your personal details are correct, including your name and address with your local authority and government bodies.
  • Pay your bills on time – by paying for your bills on time you are proving to lenders that you are able to manage your finances well.
  • Check if you are linked to another person – if you are linked to someone else’s credit rating through means such as a joint account, their credit rating could affect yours.
  • Check for fraudulent activity – if something appears on your credit report that doesn’t apply to your activity, it may be a sign of fraudulent activity. If this is the case you should contact the credit reference agency and any other relevant bodies such as your bank to inform them.
  • Manage your debt – if you are struggling to manage your existing debt, you should seek debt advice. This is important because you don’t want to be issued with a County Court Judgement (CCJ) as it would have a huge impact on your credit score.
  • Reduce your debt – if possible you should reduce any remaining debt before applying for more credit. This is because lenders will usually hesitate to lend you more credit if you already have high amounts of existing debt.
  • Stay in one place – lenders prefer to see that you have resided at one address for a substantial amount of time.

How long will it take to improve my credit score?

Your credit history is built up gradually over time as you increase the amount of payments you make on time. If you have a negative mark on your history, such as a CCJ or late payment, it will usually stay there for at least 6 years. However, if this is the case there are still options available that we can help you with.

If you would like to discuss your credit score and its effect on what mortgage you could obtain then speak to one of our advisers today.