Which optional extras can I add to my Life Insurance policy?

We suggest you seriously consider the following three optional extras:

Critical Illness cover

Critical Illness cover pays out a tax free lump sum if you are diagnosed with one of a long list of serious illnesses which are listed on your policy. Industry sources report that typically 1 in 5 men and 1 in 6 women will contract an insured illness before they reach their normal retirement age.

If you add Critical Illness cover to your Life Insurance policy, then please be aware that if the policy pays out because of Critical Illness, the policy is finished. It will not pay out again in the event of your death. If you want your Life Insurance to continue after a claim for Critical Illness, then you should buy separate Critical Illness and Life Policies. This costs more but there are potentially two payouts.

Waiver of Premium

Waiver of Premium means that if you are off work as a result of unemployment, accident or sickness, the Insurance Company will waive your policy's monthly premiums (i.e. your insurance cover will continue but you will not be required to pay the premium whilst you are off work). Waiver of Premium is not an expensive extra and is well worth considering as it could enable you to maintain the policy in difficult circumstances.

Indexation

If you want your insured sum to increase in line with inflation, then you need Indexation. Every year the insurance company will calculate by how much your cover needs to increase in order to match inflation. They then automatically adjust your policy. Your monthly premium will also increase in proportion to the increase in your sum insured.

NB If your Life Insurance is to protect a mortgage you don't need Indexation.