Understanding Life Protection

What is Life Insurance?

Life insurance acts as a financial safety net. Usually, in exchange for regular premiums, the insurer will pay a lump sum to your loved ones upon your death. This payout, typically tax-free can help cover expenses such as lost income, debts, funeral costs, and other financial obligations your family may face.

Remember- it’s important that premiums are paid to keep coverage active, as failure to do so can result in the loss of protection when your family needs it most.

 

No1 CopperPot’s Life Protection

Our Life Protection is a complimentary benefit, paid and offered at the discretion of the Board of Directors. It’s  automatically available to all members as part of their Credit Union membership. Here’s how it works:

For Savings: If you pass away before your 65th birthday, your savings balance may double, up to £40,000 across all Credit Union accounts.
• Example: If you have £15,000 in savings and pass away before 65, your estate will receive £30,000 (subject to terms and conditions).

For Loans: If you pass away before your 70th birthday, we will clear your outstanding loan balance (up to £40,000). This ensures that your family will not be burdened with your outstanding debts. We also offer extended Life Protection for members aged 70-80 with a 70+ loan, giving you extra peace of mind.
• Example: If you have a £10,000 loan and pass away before 70, we will clear that debt for you (subject to terms and conditions).

 

Understanding other Life Insurance Policies

1. Term Life Insurance:

• Coverage for a set period (e.g., 10, 20, or 30 years).
• If you pass away during the term, your beneficiaries receive a payout.
• If you outlive the policy, there’s no payout.
• Subtypes:
• Decreasing Term Insurance: The payout decreases over time to match a decreasing debt, like a mortgage.
• Level Term Insurance: The payout remains fixed for the duration of the policy
• Increasing Term Insurance: The payout increases over time to keep up with inflation.

2. Whole-of-Life Insurance:

• Guarantees a payout no matter when you pass away, as long as premiums are paid.
• Often used for estate planning, but generally more expensive than term life insurance.

3. Family Income Benefit (FIB):

• Pays a regular income to your family instead of a lump sum, helping to provide a steady income for your loved ones.

4. Other types of Life Insurance:

• Joint Life Insurance: Covers two people, with a payout on the first death.
• Critical Illness Cover: Pays a lump sum if diagnosed with a serious illness.
• Terminal Illness Cover: Provides early access to funds if diagnosed with a terminal illness.
• Children’s Cover: Offers financial support if a child passes away or is diagnosed with a critical illness.

 

Factors affecting Life Insurance Policy costs

The cost of life insurance premiums depends on several factors, such as:

• Age: Younger individuals typically pay lower premiums.
• Health: If you’re in good health, your premiums may be lower.
• Lifestyle: Risky habits, like smoking or participating in extreme sports, can increase your premiums.
• Coverage amount: The more coverage you need, the higher your premium.
• Policy type: Whole-of-life policies tend to be more expensive than term life insurance.

 

Choosing the right policy 

Focus on finding the right balance of price and coverage that supports your financial goals and provides security for your family. When selecting a life insurance policy, it’s crucial to thoroughly review the Terms and Conditions, as they can vary significantly between policies. Understanding these key details is essential to ensure you’ve chosen the right policy for your needs and if you’re unsure which option is best for your situation, consulting an independent financial advisor is highly recommended.

 

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