The level of cover you choose will affect how much you pay each month, as will your personal circumstances – things like your age, current health, and so on.

Serious/Critical illness cover provides security in the event that you fall ill. Serious illness often requires time off work and/or expensive medical treatment.

The life company undertakes, in return for continued payment of a regular premium, to pay out a capital sum on the happening of the specified insured event during the term of the policy, i.e. death and/or serious illness. Each of the life companies have a list of specified illnesses that they cover.

Mortgage protection

Borrowers taking out a ‘capital & interest’ or ‘repayment’ loan from a bank or building society in respect of their principal private residence (usually referred to as ‘home loans’) will usually be required by the lender to take out Mortgage Protection life cover, so that on death during the mortgage term, the cover will be paid directly to the lender who will use the funds to pay off the outstanding balance of the mortgage at the date of death.

In this way the borrower’s dependents will then own the residence in full, without any outstanding mortgage.

Reducing cover

This is a reducing cover which means the amount of cover will reduce as your mortgage reduces. It is usually the cheapest form of cover and has no savings element to it. Once you reach the end of the term the cover is finished and can not be continued.

Term cover

This is cover that you take out for a specific term. If you take this out for your mortgage it is usually for the term of the mortgage and the amount of money you have borrowed. With this type of policy you are covered for the full amount for the term. You can not extend the policy once the term is up.

Convertible term / Continuation

This is similar to a term policy in that you have the full amount of cover for the term but the main difference is that at the end of the term or any time during the initial term of cover you can extend the term of the policy out for longer without additional medical. This may be very beneficial if you have suffered a serious illness or are in failing health as you reach the end of the term on your policy.
It is most important that a full and honest application is made at the time you are applying for lifecover. If you do not give a full account of your health/ pastimes/ activities this may result in the life company not paying out later.