Which life insurance policy options should I consider?

You can include a number of extras in your life insurance policy allowing to claim in a wider range of circumstances. The most important extras to consider are:

Critical Illness cover

Including Critical Illness Insurance will allow you to make a claim if you are diagnosed with any of the serious illnesses covered by the policy. Each insurer has its own list of critical illnesses but the basic and most common conditions are included in most policies. These include some forms of cancer, heart attack, stroke etc.

You should consider taking out critical illness cover whether you include it as an extra  with your life insurance policy (the cheapest option) or if you take out  separate policies (costs more but gives you much more protection).

Please bear in mind, that if you do add critical illness cover as an option to your Life Insurance policy then, if you make a claim because of a critical illness, the policy will end and will not pay out again if you were to die. If you would  prefer your life insurance to continue after a claim for critical illness, you  will need to take out separate life insurance and critical Illness cover. This costs more, but you are buying more comprehensive cover that will potentially payout for critical illness AND another payout if you died whilst the life insurance policy was in force.

Waiver of Premium/Premium Protection

A lower cost option that’s well worth  considering is Waiver of Premium benefit. This ensures that the insurance company will pay your policy’s monthly premium if you were off work as a result of illness or injury. It is not expensive, but could help you to keep the policy in force if you encountered difficult circumstances.

Indexation

Indexation ensures the insurance amount of your policy increases each year in line with inflation and protects the real buying power of any potential payout now or at anytime during the policy term. Each year your insurer calculates how much your cover needs to increase and then they automatically adjust your sum insured and premium. You do not need Indexation if you are protecting a mortgage as the oustanding mortgage balance will wither remain the same or reduce over time depending upon the type of mortgage you have.