Macclesfield Insurance Services.

Frequently Asked Questions

What factors affect the price of my policy?
The price of your policy is determined by the following factors:

• Your state of health at the time of application and prior to going on risk
• Whether you smoke tobacco or have smoked tobacco in the last 12 months
• With some companies your occupation is taken in to account
• If the policy is term insurance the number of years it has to run
• If the policy is whole of life then you can set the initial level of premium to low or higher.
• The sum you wish to be insured by
• Whether you have waiver of premium on the policy and if so your occupation
• Whether you engage in any hazardous sports
• Your age at the time your policy goes on risk
• Your gender
• Whether you travel outside the UK other than for holidays on a frequent basis and to which parts of the world
• Whether your parents died before the age of 65 from certain illnesses like cancer or stroke
• Whether the sum insured is set up to be level over the term of the policy or whether it increases or decreases
• Whether your policy is set up with guaranteed premiums or reviewable premiums
• For level term insurance whether you have chosen a conversion option

How do I make a claim?
For a life insurance policy a claim arises when the life insured dies. To proceed with a claim, the person entitled to the proceeds of the policy should first inform the life insurance company or the broker who set up the policy as soon as possible.

A claim form is then sent to the claimant for completion and will need to be returned to the insurance company with the original death certificate and the policy document. If the age of the life insured was not verified at the time the policy was set up their birth certificate will also be required to verify their date of birth.

When the claim has been approved by the insurance company, the sum insured will be paid to the person entitled to the funds. If the policy was set up in joint names this will be the survivor. If it is a single life policy it will be the executors of the deceased's estate if the deceased had made a will. In the absence of a will the funds will be paid to the person entitled under the laws of intestacy. This will be decided by the Court.

If the policy was set up under a trust then the proceeds will be paid to the trustees of the trust who must then pass them on to the beneficiary(ies) of the trust. If the policy was set up as a "life of another" plan then the applicant named in the policy will be entitled to the funds.

What is the tax position?
For life insurance policies without any investment element the proceeds are paid free of all taxation by the insurance company. However, the payment may trigger a liability to inheritance tax on the deceased's estate depending on the total value of the estate. Certain business protection policies may also give rise to a tax charge on the proceeds.

Business protection policies may also be subject to taxation.
Premiums paid on a life insurance policy do not now qualify for tax relief. The only exception to this are premiums paid for some older policies, "death in service" policies and certain business protection plans.

Proceeds paid out under an income protection policy or critical illness cover are also paid free of taxation. Premiums do not attract tax relief except where they have been set up by a company subject to certain conditions.
Taxation law is subject to change.

What is the tax position?
If you stop paying the premiums the policy will normally come to an end or lapse. Macclesfield Insurance company may be prepared to reinstate the policy subject to a declaration of health and payment of outstanding premiums.

On certain policies with an investment element the premiums can be paid from the investment funds. However, after 12 months the life insurance on the policy will cease but the investment can still remain in the plan.

What is term life insurance?
Term life insurance runs for a specific period of time which is chosen by the applicant at the time of application. This is normally expressed in years or to a specific age. Most plans do not have an investment element and come to an end without value at the end of the term.

There are four types of term insurance. Level term insurance where the sum insured stays level throughout the life of the policy. Decreasing term or mortgage protection insurance where the sum insured decreases each year in line with the reducing balance of a capital repayment mortgage.
Increasing term insurance where the sum insured can be set up to increase each year. The increase is normally based on a fixed percentage or the retail price index (RPI) each year. The other type of plan is convertible term insurance. Under this type of policy the applicant has the option, when the plan comes to an end, of converting the policy to an endowment or whole of life plan subject to certain conditions and for the same sum insured without further evidence of health being required.

What is whole of life insurance?
Whole of life insurance provides cover for the whole of your life regardless of how long you live. Proving premiums are maintained the plan only comes to an end on the death of the life insured.
Most of these policies on the market have an investment element and premiums are subject to regular review. Some plans do however provide premiums which are guaranteed to stay the same throughout the life of the policy.

What is mortgage life insurance?
Mortgage life insurance is term life insurance that is taken out specifically to cover the outstanding loan on a mortgage. For most companies the underwriting is a little more lenient than for other types of cover.

Mortgage life insurance on a decreasing basis is generally used to cover the loan on a capital repayment mortgage. This is one where both interest and capital is being paid over the term of the mortgage. The other type is where the sum insured stays level throughout the term of the mortgage. This type of plan is normally used to cover the outstanding loan on the mortgage where the interest only is being paid.

What happens if I am ill and lose my income?
If you are not covered by an income protection policy and you become ill and lose your income your premiums will have to be paid from your savings. This situation could put your policy at risk depending on your circumstances.

An easy way to prevent this situation is to take out the premium protection or waiver of premium facility on the policy. This has to be taken at the outset of the plan. It cannot be added later. The additional cost involved is normally small but will depend on your health and occupation at the time of application.

Most policies provide that after normally 6 months of illness or disability the insurance company will pay or "waive" the premium until such time as you recover and return to work.

What is a "Life of Another" policy?
In most cases the applicant for the policy is normally also the life insured. However, a person with an insurable interest can apply for a life insurance policy on the life of another. The applicant in this case becomes the legal owner of the policy and not the life insured.

The applicant must be able to prove that they have an insurable interest in the life being insured to the insurance company. For example, a wife has an insurable interest in the life of her husband. Partners in business together have an insurable interest in each others lives for the purpose of the business.

If there is a claim, the applicant is entitled to the proceeds of the policy. When the application is made there is a special section on the form which the applicant completes to establish that the policy is being applied for by a person other than the person whose life is being insured.

What happens if I lose my job?
If you lose your job you will normally have to pay the premiums from a limited income from before. This could put your policy at risk. Each case will of course depend on personal circumstances.
It is possible to protect against this to a certain extent through redundancy insurance. In this case additional income can be available in addition to any state benefits payable.

What is "waiver of premium" or "premium protection"?
This is an additional feature available on most life insurance and critical illness policies. It is designed to provide for payment of the premium if the policyholder is ill and loses his/her income.

The feature normally provides that if the policyholder is ill for 6 months or more and is unable to carry on his/her normal occupation then the insurance company will pay or "waive" the premiums from the 7th month onwards. The benefit ceases when the policyholder recovers and returns to work.

Some insurance companies offer deferred periods shorter and longer than 6 months. The benefit can be set up on an "own occupation" basis or "any occupation". The benefit must be selected at the time of application. A small additional cost is involved which will depend on the type of benefit selected, occupation and state of health.