The most common policies are unit-linked, where your premiums are paid into an investment reserve from which a proportion is taken monthly to pay for your life cover. Such policies are usually written on one of two bases:
Maximum cover offers a high initial level of cover for a low premium, until the first plan review, which is normally after ten years. Following review it is likely that you will need to increase your premiums by a substantial amount to maintain your cover depending on the growth rate achieved on the underlying funds.
This cover aims to balance the level of life insurance with adequate investment to support the cover in later years and maintain the original premium throughout life. This relies on the value of units invested in the underlying fund growing at a certain level each year. Increased charges or poor performance of the fund could result in the premiums being inadequate and may have to be increased to maintain the same level of cover.
A Whole of Life plan is most suitable for planning where there is anticipation of an event but the timing is unclear.
Critical Illness Cover
Critical Illness Cover is insurance that pays out if you are diagnosed with an illness specified within the policy. It is designed to help you adapt if your life is changed by an illness and can be added to most Term Assurance policies at an extra cost. Learn more.