Snapshot: Life Insurance

Posted on: 22nd February 2018 in Insurance

Here at Holborn, we believe that insurance is the foundation of your financial planning pyramid – the solid base from which all of your other financial plans are made possible.  And what could be more important than life insurance? While death can be a difficult topic to think about, never mind raise in conversation with loved ones, it nonetheless looms as the only certainty in life.  Yet most of us actively avoid thinking about our own mortality and it often takes the death of someone we love to make us think about our own plans for such an event. The Funeral Planning Authority recently conducted a survey of over-40-year-olds and found that 57% had given no thought to preparing for or financially planning a funeral.  However, another report found that the cost of funerals has risen by more than 90 per cent on average since 2004 in the UK (The Sun Life Cost of Dying Report 2015). Those left behind can be caught out by the immediate and sometimes unexpectedly high cost of funeral expenses, not to mention uncertainty about the financial future. As part of a holistic approach to your financial wellbeing, ensuring that your family is taken care of in the event of unexpected serious illness or death should be high on your list of priorities.

What is Life Insurance?

Life Insurance is designed to pay your dependants in the event of your death. The amount is usually (but not always) correlated to your mortgage and can be taken in the form of a lump sum or regular payments.

What types of Life Insurance are there?

There are several different types of life insurance available (depending on country) and the choices can be overwhelming. Your IFA is well placed to help you manage of all of your criteria and find the best policy to suit you.

• Whole of Life Cover: This type of cover will guarantee your dependents a payment regardless of when you die.
• Term Insurance: This will guarantee a payment if you die within a specific time period. This type of policy suits those who want cover for the life of their mortgage, for example, at a fixed amount.
• Decreasing Term Insurance: An option for those taking out term insurance is to have the potential pay out decrease year after year, in line with lower mortgage debt.
• Increasing Term Insurance: You may instead want your potential payouts to increase every year, in line with inflation, for example.
• Joint Life Insurance: This can suit couples who wish to have one single policy that will pay out in the event of the first partner’s death. While it can be cheaper than two separate policies, it only pays out on the event of the first death.

There are other, more tailored, options available and of course, you can always include critical illness cover to pay out in the event of unexpected illness. Under an advanced application of Life Insurance under UK law, Life Insurance can be written into a Trust to cover family finances during the period of Probate.

Do I need Life Insurance?

Life Insurance can help you achieve peace of mind for the future. That’s the long and the short of it. Knowing that your family or dependants will be provided for, that their home will remain their own, can help you find security in facing life’s great unknown. At Holborn Assets we take our responsibilities to our customers seriously, knowing that we stand by your side as you make important decisions about your and your family’s futures.