Life Insurance
Life Insurance Advice for Individuals, Families and Homeowners
Life insurance can provide valuable financial protection for the people who matter to you if you die during the policy term.
For many people, life insurance is about making sure their family could continue to manage financially without their income. It can help cover a mortgage, outstanding debts, household bills, childcare costs and other financial commitments.
At Cambs Ely Mortgages, we provide independent mortgage and protection advice to clients across Ely, Cambridge, Cambridgeshire and throughout England. We can help you understand the different types of life insurance available and identify protection that is suitable for your circumstances.
With access to a wide range of insurers, we can compare different options rather than simply looking at one provider.
What Is Life Insurance?
Life insurance is designed to provide a lump-sum payment if you die during the period covered by your policy.
You normally choose:
The amount of cover
How long the policy should last
The type of life insurance
Whether the policy covers one person or two people
If a valid claim is made, the insurer pays the benefit according to the terms and conditions of the policy.
The amount of cover you need will depend on your circumstances, financial commitments and the people who rely on you.
Why Consider Life Insurance?
Life insurance isn't just about protecting a mortgage.
If your income contributes towards your household finances, your death could have a significant financial impact on your family.
Life insurance could help provide money towards:
Repaying a mortgage
Clearing other debts
Replacing lost household income
Childcare and education costs
Everyday household expenses
Funeral costs
Future financial plans
Providing a financial cushion for your family
The right amount of cover is therefore different for everyone.
A young couple with a large mortgage may have very different protection requirements from a family with older children, or a business owner with several financial commitments.
Types of Life Insurance
There are several different types of life insurance. The appropriate option depends on what you are trying to protect.
Level Term Life Insurance
Level term insurance provides a fixed amount of cover throughout the policy term, subject to the policy terms and conditions.
For example, you might arrange £300,000 of cover over 25 years. If you die during the term, the policy could pay the agreed amount.
This can be useful where you want a consistent level of financial protection for your family or a specific financial commitment.
Decreasing Term Life Insurance
With decreasing term insurance, the amount of cover reduces over time.
This type of policy is often considered alongside a repayment mortgage because the outstanding mortgage balance should normally reduce as repayments are made.
It can therefore provide a cost-effective way of protecting a mortgage debt, although the suitability of the policy depends on your individual circumstances.
Joint Life Insurance
A joint life policy covers two people under one policy.
Typically, a joint life policy pays out on the first death, after which the policy ends. This can be appropriate for couples who want to arrange protection together.
Alternatively, two individual policies can provide separate cover for each person.
There isn't one universally correct option. The most appropriate structure depends on your circumstances, objectives and budget.
Whole of Life Insurance
Whole of life insurance is designed to provide cover for the rest of your life, subject to the policy remaining in force and the policy terms.
It can be used for specific planning needs, including certain estate or business-planning situations, but it isn't necessarily appropriate for everyone.
Because the premiums and policy structure can differ significantly from term insurance, specialist advice is important.
How Much Life Insurance Do I Need?
There isn't a standard amount that everyone should have.
When reviewing your protection requirements, we can consider factors such as:
Your mortgage: How much is outstanding and how long is left?
Your income: How much would your household lose if you were no longer there?
Your family: Who financially depends on you?
Your debts: Would your family inherit loans or other financial commitments?
Your children: Would additional money be required for childcare, education or other costs?
Your savings: How much money would already be available to your family?
Your future plans: What are you hoping to provide for your family over the longer term?
The objective isn't simply to buy the largest amount of cover available. It is about understanding the financial risk and arranging protection that is appropriate for your circumstances.
Life Insurance and Your Mortgage
Life insurance can be particularly important when you have a mortgage and dependants.
If you were to die while your mortgage is outstanding, your family may still need to make the monthly mortgage payments.
Life insurance could provide a lump sum that can be used towards the mortgage or other financial commitments.
Life insurance is not generally a legal requirement when taking out a mortgage, although individual lender requirements and circumstances can vary.
If you are buying your first home, moving house or remortgaging, it can therefore be a good time to review your existing protection alongside your mortgage arrangements.
Life Insurance for Parents and Families
For families, the financial impact of losing a parent or main income earner can extend far beyond the mortgage.
Even where a partner continues working, there may be additional childcare, household and living costs.
Life insurance can help provide financial breathing space at what would otherwise be an extremely difficult time.
It can also be used alongside other forms of protection, such as Critical Illness Cover and Income Protection, to create a broader protection strategy.
Life Insurance for Self-Employed People and Business Owners
If you are self-employed or run your own business, your protection requirements may be different.
Your family may rely on your business income, while your business itself may depend heavily on you.
There may also be business debts, loans or other financial commitments that need to be considered.
Depending on your circumstances, business protection such as Key Person Protection, Relevant Life Cover or Shareholder Protection may also be worth considering.
We can look at your personal and business circumstances together and explain the different options available.
Can Life Insurance Be Written in Trust?
Some life insurance policies can be placed into trust.
A trust can potentially provide benefits around how and when the policy proceeds are dealt with following a claim, and in some circumstances may have inheritance tax planning implications.
However, trusts can be complex and aren't automatically appropriate for every policyholder.
If you are considering placing a policy into trust, you should understand the implications and seek appropriate legal or tax advice where necessary.
What Affects the Cost of Life Insurance?
The cost of life insurance can depend on a number of factors, including:
Your age
The amount of cover required
The length of the policy
Whether you smoke
Your health and medical history
Your occupation
Lifestyle factors
The type of policy
Whether the policy covers one or two people
Medical and lifestyle information may be required as part of the insurer's underwriting process.
Different insurers can assess the same circumstances differently, which is one reason why comparing protection providers can be valuable.
Reviewing Existing Life Cover
Having life insurance in place doesn't necessarily mean your protection needs are covered forever.
Your circumstances can change.
You might have:
Bought a new home
Increased your mortgage
Had children
Changed employment
Become self-employed
Started a business
Taken on additional debts
Increased your income
Changed your financial priorities
A regular protection review can help establish whether your existing cover still reflects your circumstances.
Life Insurance Advice in Ely and Cambridgeshire
At Cambs Ely Mortgages, protection advice forms an important part of the wider financial conversation.
We don't simply look at the mortgage. We consider what could happen if your circumstances changed and how that could affect you and the people who depend on you.
Whether you are a first-time buyer in Ely, moving home in Cambridge, remortgaging in Cambridgeshire, self-employed or running a business, we can help you understand the protection options available.
We have access to a wide range of insurers and can compare suitable options based on your circumstances.
Start a Conversation About Your Protection
Life insurance doesn't have to be complicated.
If you are unsure whether you have enough cover, don't have any protection in place, or simply want to understand your options, get in touch with Cambs Ely Mortgages.
We can review your circumstances, explain the available options and help you decide what level and type of protection may be suitable for you.
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