Life assurance pays out a tax-free lump sum to your loved ones or your estate, in the event of your death or, typically, on diagnosis of a terminal illness. This money can help ease the financial burden of your passing and could be used by your family, to pay off a mortgage or provide an income for the surviving partner, in case they are now unable to work, or need to look after any children.
The main types of Life Assurance products include Term Assurance, Mortgage protection policies, Whole of Life and Family Income policies and Endowment policies. The type of Life Assurance recommended for a customer and the amount of cover will depend on an individual’s circumstances and requirements, with some factors to consider being age, dependants, income levels, assets and financial liabilities.
In certain circumstances a lump sum is to pay off the mortgage may be required whereas in others a monthly income for your family, so that they are able to continue to pay regular bills and food shopping, as well as being able to maintain a basic standard of living, is preferable. This is a tax-free salary, not a tax-free lump sum, and would not typically affect any other benefits you may qualify for. It is to ensure that all essential outgoings can continue to be met.
