Do you have a life insurance policy? Would you be able to assertively tell someone exactly what you are covered for under your insurance policy? You would be surprised how many people are not entirely sure or are under false pretences about what their life insurance policy covers them for. Unfortunately, in many cases, it is only in the event of death or injury to the insured party that the various terms and clauses of the insured persons policy is highlighted.
When it comes to life insurance, there are many different types with each providing very different types of cover. Maybe it’s time to review your policy to ensure it is not missing any of the vital types of cover below:
Mortgage Protection
Mortgage protection insurance clears your mortgage in the event of your death meaning that your family do not have to fear being left without a roof over their heads. Most banks will require that you take out mortgage protection insurance as a condition of their mortgage agreement. No lump sum will be made to your family in the event of your death as this type of cover simply means that your mortgage will be taken care of.
Income Protection
Income protection is typically offered as an additional add-on to a life insurance policy. This type of cover ensures that you’ll still receive up to 75% of your annual income when you are out of work due to injury or illness. A common misconception is that this type of cover is included as standard in typical life insurance policies but this is unlikely to be true so be sure to double check your policy if you feel that this is something you require cover for.
Whole of Life
Whole of life insurance cover means that as long as you keep paying insurance premiums, you can enjoy insurance cover. By continuing life insurance cover right up to whenever you pass away, you can ensure that you build up a sizeable lump sum to be paid out to your family. There is a very common misconception that every life insurance policy means that you are covered for life and that your family will receive a pay-out should you pass away at any stage. However, a lot of life insurance policies are actually agreed for a fixed lump sum, which can only be paid after an agreed fixed period of time. Not sure which type of insurance policy you have? There is no better time to review your policy documents than right now.
Critical Illness
Critical illness cover, similar to income protection cover, is also traditionally offered as an add-on to whole of life cover. Critical illness cover allows you to request a life insurance pay-out while you’re still alive to cover your medical expenses so you can get better without worrying about being a financial burden on your friends and family. Typically speaking, an insurance company will offer critical illness cover for a list of specified illnesses. Again, you would be surprised how many people assume that their life insurance policy includes critical illness cover only to realise when they are knee deep in medical bills that no such cover exists.
We hope you better understand the various different types of life insurance. If you’re anyway unsure about the cover included in your life insurance policy, we would urge you to review the policy in full and amend as required.