We've got some simple answers to your questions about term life insurance and critical illness cover.
What is term life insurance?
Term life insurance is an insurance policy that pays out a cash sum if you die during the period of time you have chosen to be covered for. The cash payout will help your loved ones cope financially without you.
The amount of money paid out will depend on the premium you pay in to your policy each month.
How does term life insurance work?
It’s simple. You choose how long you’d like your life to be covered for and if you die during this time the policy will pay out.
You also choose the amount you’d like to pay each month or the value of the cash payout out when you die.
For example, SunLife’s Family Life Insurance works like this:
- You choose a term from 5 - 40 years, as long as it ends by your 80th birthday.
- You choose how much you pay each month from £5 per month
- Or, you choose the amount of the cash payout on your death during the term, up to £500,000 depending on your age
- As long as you keep paying your premium when due, the cash will be paid out when you die.
Why get life insurance?
You may be thinking you don’t need life insurance, but none of us know what lies ahead. If you were to die, who would cover costs like the household bills, mortgage, childcare, funeral expenses and other everyday outgoings?
The hard truth is, life will have to go on without us one day. Having life insurance means that if you die while your policy is in place, your loved ones will receive a cash payout to give them some financial security at a difficult time.
Anyone whose income is relied on or whose hard work would be costly to replace, like a stay at home parent, or carer, should think about having life insurance.
What types of term life insurance are there?
There are two main types of term insurance; ‘level’ and ‘decreasing’.
With level term insurance, the premium and cash payout are set on day one and never change. This is a popular choice with people who have a family or partner who depend on them financially.
Decreasing term insurance is typically used to cover the balance on a repayment mortgage. The premium never changes but the cash payout decreases as the outstanding amount on your mortgage goes down.
Can we get a joint life insurance policy?
Yes two people can be covered on one joint life insurance policy. The premium will be calculated based on both of your details.
It’s important to understand that a joint policy usually only pays out once, when the first person dies. The policy then ends. This is why some couples prefer to have individual life insurance policies instead.
What is term life insurance with critical illness cover?
With some insurers you have the option of adding critical illness cover to your life insurance policy and paying for them together in one monthly premium. Critical illness cover pays out if you’re diagnosed with a serious medical condition, such as cancer, heart attack or stroke while your policy is in force. This option is available with Family Life Insurance.
How does critical Illness cover work?
Critical Illness Cover pays out a cash sum if you’re diagnosed with a specific serious illness during your policy term.
Qualifying illness and conditions will be detailed in the policy terms and conditions. Most policies cover heart attack, stroke and certain cancers and some policies cover many more. The extent of the illnesses covered will be reflected in the monthly premium you pay.
What happens when my term life insurance policy ends?
Very simply, when the term ends, your policy ends. You stop paying monthly premiums and there would be no cash payout if you die after the term has ended. For continued protection you would need to take out a new life insurance policy.
It’s important to think about how long you want to be covered for and how much life cover you’ll need. This will depend on your circumstances and those of the people who depend on you.
SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, pet insurance, car insurance, home insurance, ISAs and Will writing services.