So in our new Jargon buster series, we explain financial terms in everyday language. First, let’s talk about life insurance.
Life insurance - Protects your family in the event of your death by helping them pay outstanding debts and maintain their lifestyle. Sometimes called death insurance.
Beneficiary - Who gets your benefit payment in the event of your death. You should keep your beneficiaries up to date, particularly following significant life changes such as getting married or having children.
Sum insured/Benefit payment - How much your beneficiaries would receive if your claim is accepted.
Indexation - If your benefit is indexed against inflation, the payment amount will increase every year to help protect your family against the rising cost of living. But bear in mind this will also increase the amount you pay for your insurance.
Terminal illness benefit - Some life insurance policies will also make an advance payment of your full benefit payment if you are terminally ill and have less than 12 months to live.
Hopefully you’ll never have to claim. But when you take out a life insurance policy, you’re buying peace of mind that your family will be fully protected if the worst happens. So it’s important that you know the right people will get your benefit payment.
Insurance can be complex so a financial adviser can help you make sense of the options and work out the right amount of insurance for your personal circumstances.