One popular form of health insurance that can work in tandem with private medical insurance policies as well as income protection or critical illness cover is life insurance.
We’ll go over the details of life insurance and help you to work out whether or not you’ll need it in addition to any private medical insurance policy you may want or already have.
In this guide:
Put simply, a life insurance policy will pay out a set amount of money to your dependents in the event of your passing away.
How much your policy pays out, as well as what form the pay-out takes will depend on the kind of policy you take out.
Typical pay-outs range from 1X your annual salary to 4X your salary and upwards.
Most businesses like to include life insurance or death in service cover in any employee benefits packages that they offer. Death in service works similarly to conventional life insurance but will usually pay out a smaller amount and only while you are employed by the company in question. Importantly this does not mean that you only receive a pay-out if you die while actually on the job, but simply while you are under contract with the relevant employer.
Types of Life Insurance
There are various different types of life insurance policy on the market, but broadly speaking they can be divided into two main camps – term insurance and whole of life insurance (also known as life assurance).
If you have a term life insurance policy, then your dependents or loved ones will receive a pay-out only if you pass away within a set period of time (known as the term).
Whole of life insurance policies will pay out in the event of your death, whenever this may be, hence the alternative name of life assurance – you are assured or guaranteed a pay-out.
Whole of life policies tend to be more expensive than term life insurance since the insurer is guaranteed to have to pay out at some point.
Life Insurance and Private Medical Insurance
Life insurance is not an alternative to private medical insurance but, depending on how much your family depend on your income in order to get by, whether for conventional day to day expenses or for loan or mortgage repayments, it can be an invaluable addition.
Private medical insurance policies offer you the peace of mind that follows being able to guarantee yourself expert medical treatment and shorter waiting times (compared with long waiting lists associated with treatment from the NHS) in the event that you should become acutely ill or injured.
As with life insurance, private medical insurance is sometimes provided by your employer as part of a benefits package, so you should always check to see if you are already covered before you start shopping around for policies yourself.
Income Protection and Critical Illness Cover
Both income protection insurance and critical illness cover are often sold alongside life insurance policies to provide the policyholder with added peace of mind.
Both work in similar but different ways, paying out in the event that you fall ill or become injured to the point that you can no longer continue to work and earn an income.
Critical illness policies will pay out if you are to contract or develop one of a list of illnesses or conditions as specified at the opening of the policy. These policies tend to pay out in the form of a tax-free lump sum of cash.
Income protection policies pay out in more instances and will pay out in the form of a regular, replacement income, usually to the tune of around 80% of your standard salary, until either you return to work, you retire, or the policy term ends.
Find Out More
To find out more about life insurance and other related products, head over to our life insurance section, where you will find several different guides on every aspect you can think of.