What's life insurance?

Things to think about

Arranging cover

What are the cover options?

What cover can be included?

A life insurance policy could include a range of benefits. Different providers offer different options, many of which are given as ‘free’ and added automatically. It’s worth remembering that the cost of the extra benefits will have been absorbed into the overall cost of cover. And of course terms and conditions will apply.

Other benefits are optional and can be included at an additional cost. This page gives you an alphabetical list of the most common extras but of course not all will be available from every provider.

Accidental death benefit

This option could pay out if you die as a result of an accident while your application is being underwritten. That means the period between you applying and the policy being confirmed. Exactly how much is paid and how long this extra cover is in place will vary depending on the provider.

Accident hospitalisation benefit

The plan will pay an amount if you’re admitted to hospital with physical injuries for a number of consecutive days immediately after an accident. There will be some terms and conditions about when the benefit might be paid – it probably won’t be valid if the hospitalisation is linked to a terminal or critical illness.

Children's Critical Illness Cover

This is when the insurer adds life insurance and/or critical illness cover for a child as part of the plan, usually up to their 18th birthday. There will be some conditions covering when it will pay out.

Conversion option

This lets you convert an existing life assurance policy to a Whole of Life policy, without you having to provide any further medical information. It will still cost more money though.

Critical Illness Cover

Different insurers list different illnesses. While the lists of potential illnesses can be long, the majority of claims are made for some types of cancer, heart disease and stroke. If you know there is a particular risk in your family tree its worth making sure you’re covered.

Disability cover

This aims to pay one or more lump sums if you become disabled because of an accident or illness which results in a loss of earnings during the policy length. You can be covered for several different categories of disability, from temporary disability that stops you working in the short term, to severe disability that affects you for the rest of your life.

Free life cover

If your life insurance is to cover a mortgage, the provider may offer this option. It aims to keep you covered between exchange of contracts and completion of purchase on your property.

Funeral benefit

This option would pay out an amount to help cover the costs of a funeral. It’s also possible to buy specific stand alone plans to cover funeral costs.

Guaranteed insurability option

This lets you increase your level of cover during the term without having to give any medical evidence. There would be an extra cost though.

Indexation

This means your policy would keep pace with inflation, as it increases the amount of cover in line with the Retail Prices Index (RPI) each year. It will probably cost you more to add this option.

Reviewable premium

With this type of policy, the amount you pay will be reviewed on a regular basis and may be adjusted as you go along to make sure you’re paying enough to provide the level of cover you’ve chosen.

Terminal illness

This means the policy could pay out if you become terminally ill as opposed to critically ill. In other words, you could access the money before you die.

Total and permanent disability

This is often offered with Critical Illness Cover. Total and Permanent Disability (TPD) means any condition not related to any particular illness that has left you totally and permanently incapacitated so you can’t carry out the activities of daily living, and where that condition is expected to continue for the rest of your life.  If your insurance includes TPD then the policy would pay out if this happened to you.

Waiver of Premium or contribution/ Premium protection

This means the provider would stop asking you to pay into your policy if you could no longer work due to incapacity caused by an illness or accident.