The benefits of life insurance

Decreasing life insurance: the benefits

Decreasing life insurance is a type of life cover that reduces in amount each year. It can help you pay off a repayment mortgage and keep your family in the home if you die during the policy term. The payout amount decreases roughly in line with the amount left on a mortgage. 

Some benefits of decreasing life insurance include:

• You can choose the level of cover you need and the length of time you need it.
• Your payments tend to be lower as the amount of cover decreases during the policy term. 
• Monthly premiums stay the same throughout the policy, so you can plan monthly expenses.

Level life insurance: the benefits

Level is a type of life insurance policy where the coverage and monthly premiums stay the same for the duration of the policy. It can cover your mortgage, living expenses, childcare, and other costs.

Benefits of level life insurance include:

• You choose the length of the policy, known as the term. 
• The potential payout remains the same no matter when a valid claim is made.
• Your loved ones can use the cash payout towards your mortgage, rent payments, bills, and living expenses.

Joint life insurance: the benefits

Joint life insurance covers two people at the same time. It can cover you and your partner or spouse on a single policy, so you’d only pay one premium each month, and it can be on a first or second death basis. This can be useful to keep your children and other half covered should something happen.

Benefits of joint life insurance include:

• If one of you passes away, the surviving spouse receives a payout.
• It covers two people on one premium, often making it a cheaper option than two individual policies.
• It can offer some financial security to the surviving partner and children.

Critical illness cover: the benefits

Critical illness cover is an additional cover you can choose to take out when you buy a level life insurance or decreasing life insurance policy. It offers protection if you’re diagnosed with a critical illness during the policy term. This covers certain conditions and can contribute to lost income, medical expenses, adjustments to your home, or any other costs.

Benefits of critical illness cover include:

• Financial support if you are diagnosed with a critical illness covered by the policy.
• The cash sum can help towards anything from household bills to childcare costs.
• Covers an array of critical illnesses, including heart attacks, strokes, and certain cancers.

Accidental death benefit: the benefits

Accidental death benefit is an extra cover included with life insurance and decreasing life insurance, that pays a cash sum if you die in an accident within a certain period. It’s provided while an application for full life insurance is processed. This cover applies to accidental death caused by an unnatural cause.

• Offers protection while your application is being considered.
• Pays out a lump sum if you pass away within 90 days following an accident.
• Included in your life insurance policy with Sainsbury’s Bank, at no extra cost.

Over 50s life insurance: the benefits

Over 50s life insurance is a type of ‘whole of life’ cover that pays a small cash sum to your loved ones when you die. It’s for people between ages 50 and 80, and there is no fixed period.

Benefits of over 50s life insurance include:

• Covers you for the rest of your life.
• Your loved ones receive a payout regardless of when you pass away (if you pass away within the first year, any premiums paid will be refunded. However, if you die as a result of an accident then full cover will be paid).
• The payout can help with funeral costs and other expenses.

There are some potential tax advantages of life insurance. Most life insurance proceeds are usually exempt from income or capital gains tax. But if the value of your estate is above £325,000, your estate could be required to pay a 40% inheritance tax on the excess.

Putting your life insurance into a discretionary trust can give you more control to choose your beneficiaries. Once you appoint trustees, they will hold the cash sum from the policy. They will then have full discretion to decide which beneficiary will receive it, how much they will receive, and when.

The payout from the insurance policies in trust aren’t considered part of your estate, which could help to manage any potential inheritance tax liability.

Life insurance is a major consideration and not everyone needs it. Whether or not you take out life cover will depend on your circumstances and financial situation. If your partner, kids or other dependants rely on you financially, it could be worth getting life insurance to provide for them in the event of your untimely death. 

The benefits of life insurance can’t be overstated. Protect your loved ones with life insurance through Sainsbury’s Bank.