Life Insurance Advice from PY Financial Services | Trusted Local Experts in Banstead and Surrey
At PY Financial Services, we understand how important it is to protect your family’s financial future. Our life insurance solutions provide peace of mind by ensuring your loved ones are supported should the worst happen during the policy term. You decide how much cover you need and for how long, and once your policy is in place, your premiums will remain fixed—unless you choose to adjust the level of cover or amend the plan. This allows you to plan ahead and manage your household budget with confidence. With nearly 40 years of experience, we’re proud to offer reliable, straightforward advice to families across Banstead, Tadworth, Epsom, Sutton, Reigate and the wider Surrey area.
Is Life Cover Known by Other Names?
Yes, it is. Because life cover is a flexible and varied product, you may come across several different names for it. Most terms reflect the purpose or features of the cover, though many are simply interchangeable with "Life Assurance." Here’s a guide to help make sense of the common terminology:
Life Insurance vs Life Assurance
These terms are often used interchangeably. However, there is a subtle difference. Insurers insure against events that might happen, like fire or theft. In contrast, they assure against something that will happen, like death. So technically, life assurance is more accurate, though most providers still call it "life insurance."
Mortgage Life Assurance / Mortgage Life Insurance
This type of life cover protects your mortgage. If you were to pass away during the mortgage term, it would help ensure your family isn’t left with the outstanding balance. It’s best suited to Capital and Repayment mortgages, where the debt reduces over time. As your mortgage decreases, so does the amount of cover, helping to keep costs lower while still providing the right level of protection.
Decreasing Life Assurance
Also known as Mortgage Life Assurance, this cover decreases over time to match the reducing balance of your mortgage. It’s a cost-effective way to ensure your loved ones can pay off the mortgage if the worst should happen.
Term Life Assurance / Term Life Insurance
Term life assurance offers a fixed level of cover for a specific term. Unlike decreasing cover, the payout amount remains the same throughout the policy. It suits interest-only mortgages, those looking to cover funeral costs, or individuals who want to leave a lump sum to support their family’s lifestyle.
Level Life Assurance
This is another name for Term Life Assurance. The word “level” simply refers to the unchanging amount of cover during the policy term.
Increasing Life Assurance
To help protect your policy from the effects of inflation, insurers often offer an increasing cover option. Each year, you can increase your cover in line with the Retail Price Index (RPI) without new medical checks. This keeps the policy’s value relevant over time, so your family gets a payout that holds its worth.
Index-Linked Life Assurance
This is another way of referring to Increasing Life Assurance. “Index-linked” highlights that the cover adjusts in line with inflation, using an official index such as the RPI.
Critical Illness Cover
Critical Illness Cover adds another layer of protection. It pays out a tax-free lump sum if you’re diagnosed with a serious illness listed in your policy—typically including conditions such as cancer, heart attack, or stroke.
It’s worth noting that definitions vary by provider. For instance, some early-stage cancers may not qualify for a payout unless they meet a specified level of severity. We always take time to explain the details clearly so you understand exactly what your policy covers.
IF THE POLICY HAS NO INVESTMENT ELEMENT THEN IT WILL HAVE NO CASH IN VALUE AT ANY TIME AND WILL CEASE AT THE END OF THE TERM. IF PREMIUMS ARE NOT MAINTAINED, THEN COVER WILL LAPSE.
PLANS MAY NOT COVER ALL THE DEFINITIONS OF A CRITICAL ILLNESS. THE DEFINITIONS VARY BETWEEN PRODUCT PROVIDERS AND WILL BE DESCRIBED IN THE KEY FEATURES AND POLICY DOCUMENT IF YOU GO AHEAD WITH A PLAN.
Why do you need it?
The loss of a spouse or parent can leave dependants with additional issues to cope with other than the emotional. If you are inadequately insured, your dependants may be left with a dramatically reduced household income, which could affect their quality of life. Potentially there may be reduced opportunities for children such as the ability to pay for a university education or difficulties in maintaining mortgage payments on a reduced income.
In the event of your death, a lending institution will not write off your debt. Rather, they will continue to pursue the debt through your dependants and could, ultimately, foreclose on the loan meaning the loss of the family home.
What will the State provide?
The main benefits the State may provide are the Widowed Parent’s Allowance and Child Benefit. Depending on whether the widow(er) qualifies for Income Support, the State may or may not help with paying the mortgage interest.
The method for calculating which benefits an individual may qualify for is extremely complicated. More information is available at the Department of Work and Pensions website www.dss.gov.uk.
Frequently Asked Questions
Under normal circumstances you Life Cover will not pay out anything to you if you are ill. The policy is only designed to cover you for death and as a result will only pay in this circumstance.
47% of people who claimed were under 40
27% were between 41 to 50
20% were between 51 to 60
All figures taken from Bright Grey claims statistics 1 July – 31 December 2011
Policies can include something called ‘Terminal Illness Cover’ which will allow, at the insurance companies discretion, a payout of your policy early if you are diagnosed with a terminal illness where you will die within 12 months.
This is offered as a goodwill gesture by the insurance companies to allow you the opportunity to settle your affairs and make your own arrangements before you die.
It is important to understand that this is not the same as Critical Illness Cover and will only be offered for conditions where your doctor has told you that you will die within 12 months.
Taking Life and Critical Illness Cover together can provide a great method of ensuring you are fully protected against the eventualities of death and contracting a critical illness such as a heart attack or stroke. It can also serve to reduce Critical Illness premiums compared to taking a Life Assurance and Critical Illness Cover separately.
Your policy can include an option called index linking which allows it to increase on an annual basis to offset the effects of the years inflation and increases in the retail price index.
This is important because as time goes by the real time value of your payout will decrease. That is to say that what you can buy for £100,000 today will not be the same in ten years time. Index linking your Life Assurance policy will allow it to maintain that value.
At the time of your death your family will obviously be upset and whilst thinking about your insurance payout will probably not be the first thing they want to think about, it may be necessary to cover your funeral expenses or pay off your mortgage. As such it is important that the process for ensuring your family is paid quickly is in place.
Normally your life insurance payout would be paid into your estate and left to the process of probate to decide how it should be divided up and used. Unfortunately, probate can be a lengthy process (at times up to 6 months), especially if your will is contested.
One way to avoid the probate procedure for your life assurance is by having your policy written into trust. Writing your policy into a trust allows you to nominate to whom the payout should be made, meaning that it is paid by the insurance company much faster to exactly who you intended it to go to.
As an added benefit, writing your Life Cover policy into trust can also help to limit the effects of inheritance tax on your estate because the payout would no longer form part of the estate.
Having your policy written into trust can normally be done at no extra charge as long as you include it on the application of the policy itself.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TRUSTS OR INHERITANCE TAX PLANNING
