Long-term insurance

Long-term insurance ensures that your dependants will be provided for when you die or, in some cases, if you become permanently disabled. It can also provide financial security when you retire. Life insurance ensures that a specified amount of money will be available for settling your debts or looking after dependants after your death. Disability cover is an additional option. Retirement plans offer a large variety of choices for providing for the future, and often include life insurance.

Life Cover

There are different types of life cover

Term insurance

Term or fixed insurance is a risk product and is ideal if you need a policy to provide life cover for a set period of time, for example while paying off a bond on your house. It is cheap and you can easily add benefits such as lump sum disability to it, but it does not build up an investment value. After the agreed period of time, the cover simply expires.

Life insurance

Whole Life Cover is ordinary life cover which is valid until you die or you surrender the policy - it covers you against the risk of death. This is ideal for the person who wants to leave a fixed amount of money behind after death, for example to pay estate duty. It is the cheapest form of life cover. The premium is invested by the insurance company. You can borrow against it if you wish.

Universal life cover is similar, but has an investment component. The return on the investment portion depends on the nature of the investment. Because it is influenced by the investment performance, it doesn't guarantee a fixed rate of growth , but the chance of rapid growth makes it a popular choice in spite of this.

Endowment policies

Endowment life insurance is in effect a savings plan rather than simply life cover, but can combine both risk and investment. You pay a monthly premium for a specified period, after which it matures and you are paid out a lump sum. It is different from other types of life cover in that it is designed to pay you during your lifetime rather than your beneficiaries after your death. You can also invest a lump sum in a single premium endowment policy. It is an excellent way to save as specific amount of money for a particular purpose (for example, university fees) and the life insurance portion comes into effect if you die before the policy is due to be paid out. However, there are limitations on the benefits payable in the first five years.