Frequently Asked Questions

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Mortgages

General

Term insurance is an insurance policy for a specific term. For instance you may take a life insurance policy for 25 years, if you died within the 25 year term the policy would payout, if you died after the 25 year term there would be no pay out.

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Decreasing cover is an insurance policy where the amount of cover provided decreases every month, typically this type of insurance is useful for ensuring a debt that is being repaid would be covered in a specific event such as death or critical illness. Level cover insurance is a policy which has a set amount of cover throughout the term, this can be useful to cover an interest only mortgage as the amount of debt would remain the same through the term.

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The length of cover required will depend on your circumstances and what you are wanting to protect. You may need to cover a specific debt such as your mortgage, you would then link the amount and term of cover to the amount and term of your mortgage. You may need to provide an income for your family until your children are no longer dependent on your income, you may decide to link the term of your cover to the age of your children. Your adviser at Bennison Brown will be able to advise what cover is best for your circumstances

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You can arrange either guaranteed or reviewable premiums. Guaranteed premiums will not change for the term of your policy, provided you do not make any changes. Reviewable premiums will be reviewed, typically every 5 or 10 years and may increase.

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Having a pre-existing medical condition, especially if it’s serious, can make it harder and more expensive to arrange cover. Some insurers may decline to cover you, others will exclude specific conditions. There are specialist insurers that offer life cover to people with pre-existing conditions, but you should be prepared to pay a higher price because of the higher risk of a claim.

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Depending on your age and circumstances you may be able to amend your policy after it has started, any increase in cover will increase your monthly payments.

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No, a term insurance policy will have no cash in value, this means should you not claim on the policy and it either comes to the end of its term, or you can cancel it, you will receive no cash back.

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Guaranteed premiums are set at the start of the policy and will remain the same throughout the policy, provided you do not make any changes to the policy. Reviewable premiums are set for a period of time and then reviewed, this may mean you find your insurance costs rising in the future

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Life Insurance

Life insurance is an insurance for a set term, which is designed to pay out a sum of money to your estate should you pass away during the term of the policy. This can either be paid as a lump sum or monthly benefit. The cost of a policy is determined by a number of factors including your age, health, lifestyle and amount of cover required.

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Whole of life cover is a type of life insurance, but rather than being for a specific term this policy will continue until death whenever that maybe. These are often linked to an underlying investment, the cost of your policy can often be determined by how well this investment performs.

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Death in service is a benefit that employers provide that is designed to pay out a lump sum linked to your salary on your death, this can be any amount but typically is around 4 times your income. This will only be payable whilst you continue to be employed by that employer and depending on your circumstances you may need to take out additional cover.

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The proceeds of the policy will be exempt from any income or capital gains tax. If you have passed away the proceeds will be paid to your estate which may be subject to inheritance tax (IHT). You can put your policy in to trust to ensure that the proceeds do not form part of your estate and are therefore not liable for IHT.

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The policy may have exclusions (circumstances in which it won’t pay out) which will vary depending on your insurer. These can be due to alcohol, drug abuse, suicide, or deliberate exposure to danger, your adviser will be able to discuss this in more detail with you.

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Critical Illness

Critical illness cover is an insurance that is designed to pay out a sum of money to you should you have a critical illness that meets the insurance providers definition. This can either be paid in a lump sum or as a monthly benefit. The amount of critical illness and definitions for each critical illness can vary drastically between insurance providers. It is important that you have an adviser who can help provide the correct cover for you. At Bennison Brown we use the latest technology to compare policies to ensure you have the best cover for your circumstances.

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Although cost will be a factor when choosing a critical illness policy, the cheapest may not provide the level of cover you require. It is important that your policy provides a comprehensive cover, so always check to see how many conditions are covered. Some policies offer ABI+ definitions. This means that the critical illness definitions shown on the policy exceed the definition set by the Association of British Insurers (ABI), the trade body for insurance companies. This should make it easier to submit a successful claim for that particular condition, as ABI+ definitions are wider than the industry standard.

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Income Protection

Income protection is an insurance policy designed to pay you a set amount each month to replace your lost income should you be unable to work through accident or sickness. The cost of the policy is determined by a number of factors including your age, health, lifestyle and amount of cover required.

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Mortgage Payment Protection Insurance (MPPI) is designed to cover the cost of your mortgage payments in the event that an accident, sickness or unemployment stops you from working. The cost of the policy determined by a number of factors including your age, health, lifestyle and amount of cover

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Income protection can cover accident, sickness and unemployment. The cover is designed for replace part of your income should one of the 3 events happen. 

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You can arrange to have a deferred period on your income protection, typically this would me 1, 3 or 6 months. This means should you be unable to work, the policy will not start paying out until the end of the deferred period. The longer the deferred period, the lower your premiums would be.

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It will vary from policy to policy, but typically around 70% of your gross income. You can cover less than this to reduce the premiums, however you need to ensure in the event of a claim you receive an adequate amount for your circumstances.

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You can either arrange a policy that lasts until your retirement age (there may be a cap as to what age you can be covered to) or you can arrange a policy that only pays for a limited time. As an example this could be 2 years, after claiming for 2 years the policy would then stop paying any benefit, if you return to work you may be able to claim again on the same policy in the future 

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Yes, self employed are eligible to claim on an income protection policy

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Yes, there are some providers who will allow cover for full time parents who are not in paid employment.

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It is not possible to have a joint policy as the policies are tailor made to the individual requirements & would therefore need to take two separate policies to ensure the level of cover was correct

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Home Insurance

Home insurance comes in 2 parts, building insurance and contents insurance. Depending on your circumstances you can choose either one or both parts to this.

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Building insurance covers your bricks and mortars against things like fire and weather damage

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Contents insurance covers your belongings against issues like fire, theft or loss.

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If you are the freeholder, most mortgage lenders will insist you have buildings cover in place to protect their interest in the property when you apply for your mortgage with them. This can be typically be with any provider and does not necessarily need to be with the mortgage lender.

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