Company Information
Life insurance FAQs
What if I've got life cover under my pension scheme?
You may find that if you have a company pension or personal
pension, life assurance is provided. This would mean a lump
sum is payable should you die before normal retirement date.
With a company pension scheme you may find the level of
life cover is expressed as a multiple of your salary. Some
employers will only provide this cover after you've been
employed for a certain period. Personal pensions often pay
out the value of the fund on death before retirement. You
should check the benefit provisions of your pension scheme
before deciding how much additional life assurance is required.
What will I get back when my policy stops?
If you have a term assurance or family income benefit
plan, nothing will be payable to you at the end of the policy
term. These policies are designed to provide low-cost protection
and pay out only on death. They don't have any investment
or savings element at all and so don't have any cash-in
value.
Can I have a joint policy that covers me and my partner?
Yes, it is possible to have joint policies that will pay
out if either person is to die during the term of the policy.
For a whole life policy being used for inheritance tax planning,
cover would usually continue after the death of the first
person, with benefits being paid on the death of the second
person.
How can I be sure of the costs?
Each life assurance company has to decide whether or not
you are an acceptable risk. On the proposal form you fill
in, they will ask questions about your state of health,
whether you smoke or not and family medical history. Your
answers determine what premiums will be charged for the
cover you need. Life assurance companies may request further
information from your Doctor or ask you to undergo a medical
if they feel it's necessary, even so it may not mean you
have to pay higher premiums.
What happens if I stop paying the premiums?
With most life assurance policies if you stop paying your
premiums the cover will cease. If you then want to start
the cover again, you will probably have to set up a new
policy and you would need to provide current medical details.
You may also find your monthly premium has changed. Many
whole of life policies allow premiums to stop for short
periods, this is known as a "premium holiday". Whole of
life cover and endowment assurance plans have an investment
element, so a cash-in value or surrender value may build
up. In the early years, any surrender value might be lower
than contributions paid in.
What about tax?
Death benefits will normally be free of income and capital
gains tax. Upon death the proceeds will normally form part
of your estate and may be subject to inheritance tax. You
can set your life assurance cover up under trust: payment
on death would then be made to the trustees and under current
legislation would not form part of your estate for inheritance
tax purposes. Expert legal advice should be considered in
more complex situations.
