Types of cover
Is Life Cover known under different names?
Because Life Assurance is such a varied and flexible product, it can come under a number of different names. Each generally describes the covers aims however some are simply interchangable with Life Assurance:
Life Insurance
A general term used to mean the same as Life Assurance. The
difference is that in the insurance world they insure against
something which might happen but they assure against some they know
definitely will happen at some stage, i.e., death.
Mortgage Life Assurance / Mortgage Life
Insurance
Mortgage Life Assurance (often referred to as 'Decreasing Life
Assurance/Insurance') is used to protect your mortgage against the
risk of you dying and leaving it behind for your family to continue
paying.
Mortgage Life Assurance is only suitable for mortgages which are Capital and Repayment because the level of cover is designed to reduce as your mortgage reduces over the years.
The reduction ensures that there is always enough in the 'pot' to
pay off the mortgage if the worst happens but there will be very
little surplus remaining.
Term Life Assurance / Term Life Insurance
Term Life Assurance (often referred to as 'Level Life Assurance')
is the opposite of Mortgage Life Assurance in that the amount of
cover remains the same throughout the term of the policy and does
not reduce. This type of Life Assurance is suitable for those
people with Interest Only mortgages, those wishing to cover funeral
expenses and people wanting to leave a sum of money behind to
ensure their families standard of living.
Level Life Assurance / Level Life Insurance
Level Life Assurance or Level Term Life Assurance is another term
which is used to refer to Term Life Assurance.
Increasing Life Assurance / Increasing Life
Insurance
Increasing Life Assurance is an extra option offered by most
insurance companies which allows you to protect your Term Life
Assurance policy from the effects of inflation. Each year you will
be offered the opportunity to increase your amount of cover inline
with the retail price index without any further need for medical
information.
This allows your policy to retain its real value over the years so
your family receive a payout of equivalent value in years to
come.
Index Linked Life Assurance / Index Linked Life Insurance
Another term used to refer to the increasing life assurance option
offered on term life assurance policies.
Critical Illness Cover
Critical illness cover is an important financial safety net. It's designed to to pay out a fixed cash amount if you're diagnosed with one of the critical illnesses covered in the individual insurer's policy.
Critical Illness Cover is designed to pay out in most circumstances including cancer, heart attack and stroke. However because of advances in medicine, not every type of cancer will have a severe impact on your lifestyle if discovered and treated early enough, for example, a cancer needs to have spread or reached a specified severity to be covered.