Most of us have heard of Life Assurance and appreciate that it is a policy that pays out either a lump sum or a series of payments when you die. These payments are normally paid without the deduction of any personal income tax.
It is however worth considering that any proceeds from a life assurance will be added to the deceased’s estate. If this takes the overall estate above the nil band threshold for inheritance tax, this tax would be payable for any amounts in excess of the threshold. This can be avoided by placing the Life Assurance in Trust and therefore separating out these proceeds from the ‘estate’ and keeping them tax free.
The proceeds of a Life Assurance policy are commonly used to pay off a debt such as a mortgage or to provide an income for your dependents.
You pay regular premiums to a Life Assurance company for either a given time span, or in the case of Whole of Life Assurance, normally through to death.
Life Assurance policies can be combined with other forms of insurance, such as Critical Illness insurance so that you receive the lump sum if you are diagnosed with a specified critical illness or on death.
Simply Life is a new and innovative type of Life Cover from Aegon promising a low cost and easy to understand protection product.
There are various ways of calculating how much life cover you should have. You will need to consider all of your debts, including mortgage, credit cards, car loans etc and also the ongoing monthly costs that will continue after death.
If you have a repayment mortgage, it is quite likely that you protected your mortgage with a decreasing term assurance policy.
This type of plan provides protection over the term of your mortgage, with the level of cover reducing in line with your decreasing mortgage liability.
The advantage of decreasing cover, as opposed to level cover, is simply that the cost is lower.
However, this approach could turn out to be a bit short sighted and not necessarily the best type of plan for you, so please read on.
Barry has helped me with pension advice and monitoring. He has been extremely professional, courteous and helpful. Thank you.