There are a number of cover options and free cover options to choose from. You also have the option to put your policy in a trust.
It depends on your personal circumstances. Some things you may want to consider are:
|Cover option||Definition||Please note|
|Level cover||this means that the benefit amount and your premiums remain the same throughout the benefit term and can be used, for example, to protect an interest-only mortgage.|
|Decreasing cover||this means the benefit amount will reduce each month similar to the way a loan or repayment mortgage works.||If the benefit is to cover a repayment mortgage or loan, we will decrease the benefit amount each month assuming a fixed rate of interest of 10% a year. There may be insufficient funds to repay the loan if the interest rate on the mortgage exceeds 10% or the loan is increased or extended.
|Increasing cover||this means that the benefit amount automatically increases each year in line with the Retail Price Index (RPI). The increases will be at least 2% up to a maximum of 10%. At the same time, your premium will increase at a higher rate than the increase in benefit amount.|
|Premium Protection||Premium protection on a policy gives you cover for your premiums so you don’t have to pay them if you suffer a disability or accident which leaves you unable to work. We will start to pay the premiums for you after 13 weeks. This option can only be added, at an additional cost, at the time you take out the policy.||We will continue to pay the premiums until you return to work, reach age 66, or the policy ends, whichever is sooner. This helps to safeguard your policy and your protection.|
If you choose critical illness with life cover, your premiums are reviewable every 5 years.
Please refer to the Key Features for further details.
We will only pay once under any type of free cover in respect of the same person. The policy will end if we pay out the free cover amount.
To be eligible for our 90 Days’ Mortgage Free Cover or Free Accidental Death Cover, you must:
|Free cover options||What are you covered for?||When does the cover end?|
|90 Days’ Mortgage Free Cover||
You will be covered instantly from the date we receive your fully completed application, direct debit instruction and you’ve exchanged contracts (concluded missives in Scotland).
This means we could pay the initial amount applied for up to a maximum of £250,000 on death, terminal illness or critical illness, depending on which of these you have applied for.
Any claim must meet the claims criteria for both the benefit applied for and the 90 Days’ Mortgage Free Cover.
|Mortgage Free Cover continues until the earlier of
See our Mortgage Free Cover guide for more details.
|30 Days’ Free Accidental Death Cover||
Free Accidental Death Cover will only apply if your application is referred to Scottish Widows for an underwriting decision. The 30 day free cover period starts from the date we receive your fully completed application and direct debit instruction.
If an accident happens within this 30 day period, and you die within 60 days of the date of the accident, we could pay out the initial amount applied for up to a maximum of £250,000 if the claims criteria for both the benefit applied for and 30 Days Free Accidental Death Cover are met.
|Accidental Death Cover continues until the earlier of:
See our Free Accidental Death Cover guide for more details.
A trust is a way of transferring ownership of your assets. If you have assets over, or close to, the inheritance tax (IHT) threshold and you don’t want to simply gift everything away, one of the best ways to potentially reduce IHT liability is to put these assets in trust. However, trusts are usually set up on an irrevocable basis, which means they cannot be torn up and rewritten like a will.
There are three sets of people involved in a trust:
When setting up a trust you need to choose these people carefully.
The advantages of putting some or all of your Protection for Life policies into trust are:
The value of any tax advantages will depend on your personal circumstances which may be subject to change in the future. Remember tax rules can also change.
The policy has no cash-in value at any time.
If you don’t pay your premiums on time your cover will stop, your benefit will end and you’ll get nothing back.
The policy will end if we pay out the benefit amount but if the benefit amount has not been paid out by the end of the selected term, the policy will end and you’ll get nothing back.
If the benefit is to cover a repayment mortgage, we will decrease the benefit amount each month assuming a fixed rate of interest of 10% a year. There may be insufficient funds to repay the loan if the interest rate on the mortgage exceeds 10% or the loan is increased or extended.