Which optional extras are important with Life Insurance?

We think that the following optional extras are important to consider: Critical Illness Cover, Waiver of Premium and Indexation. Terminal Illness cover is normally automatically added to your policy free of charge so you don't need to consider that as an optional extra.

Critical Illness cover
Critical Illness Insurance covers you for a long list of serious illnesses - each Insurance Company has its own list of critical illnesses, but for a typical list have a look at the FAQ entitled ‘What benefits will Critical Illness cover add to my Life policy?’

You can combine Critical illness cover with your Life Insurance policy (which is a lot cheaper than buying them separately) or by taking out separate policies (this way you get a lot more protection).

If you get a combined policy it's important to be aware that if the policy pays out because of Critical Illness, the policy automatically terminates. 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'll need to buy Critical Illness and Life Policies separately. This costs more but you benefit with the possibility of two payouts.

Waiver of Premium
Waiver of Premium is an option which pays out your monthly premium if you are off work through accident, sickness or unemployment. It is not an expensive extra and is well worth having because you might not be able to afford the premiums if you were off work.

Indexation
Indexation means that your sum insured increases in line with inflation. Each year the insurance company works out how much your cover needs to increase by to match inflation, and your premiums are automatically adjusted to cover this increased sum.

NB If you are getting mortgage life insurance then you do not need indexation.