There are a range of different types of Insurance Products which you can avail of to protect you and your family from the unexpected:
Life insurance is a contract between an insured (insurance policy holder) and an insurer where the insurer promises to pay a designated beneficiary a sum of money (the benefits) in exchange for a premium, upon the death of the insured person.
This is independent of your mortgage but is taken out to track your mortgage. Like your mortgage balance the benefit payable under your mortgage protection policy decrease over time. In the event of the death of the life assured, the insurance company will discharge the balance of the mortgage.
With level term, the value of cover stays the same for the term of the policy. In the event of the death of a policy holder, the full amount that has been insured will be paid out.
Convertible term assurance is exactly like level term assurance, but with an extra benefit, the policy holder has a "conversion option", which he or she can exercise at any time during the term of the policy. This gives the policy holder the option to extend the cover without the life assured having to undergo a medical examination or supply evidence of good health, at the time of the conversion. Premiums are based on age at the time of conversation.
A Whole of Life policy can provide cover to last throughout your life. There is usually a savings element to the policy. Some contracts are reviewed after ten years and periodically thereafter to ensure that there is a sufficient premium being paid to maintain cover until the next scheduled review. Cover/premiums generally increase at each review. The savings element can be used to to meet a portion of your increased premiums as you get older.
There is also an option of purchasing a whole of life contract where there is no built-in review mechanism. This would allow the policyholder to have a sum assured in place forever at today's prices. Whole of life cover is generally more expensive than the other covers outlined.
Serious Illness insurance pays you a tax-free lump sum if you are diagnosed with one of the specific illnesses or disabilities listed in your policy document. It is often sold as an extra benefit on a life insurance or mortgage protection policy, but it can also be sold as an insurance policy on its own. Full or partial payouts are possible based on the severity of your illness.
Serious Illness can be structured in 2 ways:
Accelerated – Any illness payout reduces the life cover by that amount.
Standalone – Any illness payout is independent of the life sum assured.
Income protection insurance pays out a regular cash payment that replaces part of your lost income if you can't work due to a medium to long-term illness or disability. It can replace up to 75% of your income minus social welfare for those who can claim welfare until you can return to work, or until you reach a selected retirement age.
Income protection insurance does not cover redundancy. You must be in full-time paid work or be self-employed to avail of this product.
Are you a joint business owner - what happens to the company in the event of either of your deaths and how would your family suffer as a result of this?
If a key person in your business died or suffered an illness how would this affect the business turnover? Take out a life / serious illness policy to provide a sum of money which is payable to the company in the event of the death of a key person, in order to re-train or restructure for the loss of that person.
Protect all the business partners by providing a cash sum to the surviving partners to allow them to purchase the shares of a deceased partner from the deceased's next of kin. This type of policy is taken out in conjunction with the drawing up of a legal agreement which requires a detailed discussion between the partners and their families.
The type of policy chosen depends on the number of partners and who the owner and beneficiary of the policy is.
Terms and conditions apply to all of the above options so please contact OBN Financial Services for further details.