Now consider your family's position immediately after your death. Would they know what to do? Life goes on and bills have to be paid, but would they know how to get the essential funds? Even if your spouse had always dealt with the household financial matters, this would be difficult to deal with without knowledgeable support and assistance. But suppose that you had been wise and had obtained adequate insurance to cover just such circumstances. The grief would be no less, but at least a quick call to the insurance company would get things moving. Then, by the time that the period of mourning was over and reality started to demand attention, an expert would have looked at your family's affairs and would have at least initial answers ready.



In the real world there are many types of problems, from the minor to the disaster, and there are consequently a host of variations on standard insurance policies to cover most eventualities. You only need to concern yourself with a few of these varieties for straight forward life cover, and ‘term' policies will meet most of the less complicated situations.

The name ‘term insurance' indicates that the insurance is set up for a specified period or term, at the end of which all cover ceases and there is not normally a surrender value. Payment is usually provided on the death of the policy holder in the form of a lump sum. However, there are a number of different types of term insurance from which to take your pick. They have been ‘designed' to suit different needs but this need not cause concern' as the purpose of each type is clear enough for a decision to be reached without difficulty.

A level term policy pays an amount which is specified at the outset, and this value does not change. These are frequently used to cover the capital sum of an interest only mortgage, which stays constant whilst only the interest is paid off.

An increasing term policy takes account of inflation during its term, but it is inevitable that higher premiums will be required, to cover the extra cost.

A decreasing term (also known as a mortgage protection) policy is used to cover a repayment mortgage, and once a year the value is reduced to the expected balance remaining on the mortgage. This has the effect of reducing the premiums because the longer it lasts the lower the payout, down to zero at the end.

Away from the likes of mortgage protection where any payout is in the form of a lump sum, which solves any problem about keeping a roof over your family's heads, the day to day costs of living can also present something of a problem. An inflow of smaller sums on a regular basis will be needed to keep food on the table etc., and this type of cover can be obtained with a family income benefit policy. This is still a term policy in that it has a final date beyond which it ceases to operate, but any payout is in a very different form. You death would trigger annual tax free payments through to the end of the term, and because the period for such payments is constantly decreasing to a finite end, the premium costs necessary can be held to a minimum.

Away from term insurance, but extremely worthwhile is the well known whole of life cover. This is perhaps one of the simplest forms of cover which runs to the point of the death of the insured; it then pays out the guaranteed amount which will be augmented by a bonus or bonuses if the ‘with profits' version was purchased. The value of any bonuses depends on the performance of the investment during the period that it was current.

If both you and your spouse are earning and putting a significant contribution into the ‘housekeeping' pot, you should consider obtaining cover for you both. This could be in the form of a joint policy which will pay out only on the first death, thus holding the cost down. Cover as individuals will be more expensive because there will be two payouts, triggered by each death.

So get the peace of mind that only good insurance cover can provide, and visit the internet for a good broker who will guide you to your new term insurance.