Life insurance
Life insurance is a type of policy that provides financial support to your loved ones if you die. It can help minimise the financial impact that your death could have on your family and offer peace of mind to those you care about most. Most life insurance policies are designed to pay out a cash sum to your loved ones if you die while covered by the policy. It can help them deal with everyday money worries such as household bills, childcare costs or mortgage payments.
There are different types of life insurance policies available, such as term life insurance, whole life insurance, and family income benefit insurance.
- The amount of cover you need and how long you need it depends on your personal circumstances
- You can choose between joint or single life insurance policies and pay your premiums monthly or annually
Please note that this is a high-level description of life insurance. If you have any specific questions or concerns, please feel free to ask.
Critical illness
Critical illness is a different type of insurance to life insurance that pays out a lump sum if you are diagnosed with a serious illness or injury and are unable to work. The illnesses covered by critical illness policies vary between insurers, but most will typically cover life-threatening conditions such as a heart attack, stroke, and cancer.
Critical illness policies are often tied in with life insurance, but you can also get standalone cover. You can choose how much cover you want and how long the policy will last.
The insurer will usually ask you to complete a health questionnaire during the application process and may ask to review your medical records, so it’s important to declare all pre-existing health conditions when you apply.
Once the policy is active, you can make one claim if you’re diagnosed with a specific illness that it covers. Once you receive the lump-sum payment (which is tax-free), you can use the money for anything you like, whether it’s to pay off the mortgage, cover lost income, day-to-day expenses or health-related costs.
Income protection
Income protection insurance is a type of insurance that will protect your income if a serious injury or illness prevents you from working. It is key for any self-employed workers and those with their own business. But, even if you aren’t self-employed, it’s worth considering an income protection policy if you have dependents, debts or loans to repay, you don’t receive sick pay or you don’t have savings.
When you buy income protection, you can choose what outgoings you would like a policy to cover. This can include your income, your mortgage or rent costs, loan or credit repayments, or other expenses such as household bills or childcare fees. You will also need to decide how long you would need the money to be paid out for. There are long and short-term policies to choose from and you’ll usually need to choose between the money being paid out for a set period of time, two years for example, or until you retire1.
To apply for income protection, you’ll need to give personal and financial details when applying for a new policy. This is where personalised, whole-of-market advice provided here at Birch can help secure the right policy and terms.