What is life cover?
Life cover is another name for life insurance and provides a customer with a financial payout to their family in the unfortunate event of their death.
Life cover is most often offered to a customer when they take out their first mortgage, but with the average age of first time buyers now reaching late thirties, many other customers should also consider the benefits of life cover if they have any other financial responsibilities.
Why do I need life cover?
Life cover is really important for anyone who has any form of financial responsibilities, which would be left to another family member in the event of that person’s death. For example, if a male 30 year old had a £200,000 mortgage, and two children, and died, his wife would then be left with two children, and a huge mortgage. With life cover she would receive a huge lump sum payment she could use to clear the mortgage, and to help pay for the children.
Many of our customers admit that their families would probably have to sell the home and move somewhere far smaller, as they simply would not be able to afford the mortgage. A life cover payment stops your family from having to move, at a time which will already be difficult enough with the loss of a loved one.
How does life cover work?
A customer will receive a life cover quote when they are initially looking to take out life insurance, and that life cover quote will be a premium they will pay on a monthly basis until the cover runs out. They will pay that monthly premium until the end of their cover, or until they die. If at the end of the cover they are still alive, then their policy will be cancelled. If they die at any point during the policy, then the policy will pay out, and no further monthly payments will need to be made.
The only exception to this rule is whole life insurance, which provides life cover for a customer’s whole life, so whilst a customer will still pay for their insurance over a set term, the cover will last until they die, whenever that is, effectively guaranteeing a payout and a return on the customers investment.
Whole life insurance is roughly eight times more expensive than standard life cover as a result.