BITS AND BOBS

LIKE ANY OTHER financial product, life insurance comes with a range of bits and bobs (or optional extras, if you’re being formal) that may or may not be helpful to you. There are other issues around life insurance too, which we look at here.

You can choose a life insurance policy, for example, with waiver of premium, where the life insurance company will continue to pay your premium if you lose your job because of accident or sickness.

Critical illness insurance can be bought as a separate cover to life insurance or as an addition to whole life, endowment or term insurance. This covers you for serious medical conditions like heart attack or cancer. If you develop one of the conditions listed in the policy a lump sum will be paid.

Income tax is the bane of many lives, but provided your life insurance policy is a qualifying policy, the payout on death or maturity of the policy is tax-free. In order to be such a policy your life insurance has to meet a number of statutory conditions, including the need to pay premiums at annual or shorter intervals for at least 10 years or until your death, if this is earlier. BUT BEWARE: If you surrender your policy within the first 10 years may incur income tax – check with your salesperson or adviser for details.

For a fuller explanation of life insurance generally, go to the Association of British Insurers (ABI) at www.abi.org.uk