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Some insurers will allow the insured to select to have certain bolt on options. These are not given away free and will usually result in an increase in premium, although in some cases that may be just a slight increase. In some cases the change in premium may be so little that the insurance company may automatically include the option.

Not all options will be available, some are only offered with certain types of life insurance policy whilst some insurance companies may not be willing to offer all the options.  In some cases certain life policies attract certain tax advantages that would not be allowed if they were to include certain Bolton options.

What follows is only a very brief description of some of the options that may be available. You should check these out with your adviser since some insurers will use different terminology and names for certain option. Also some insurers may attach certain conditions to certain options.

Waiver of premium option. The insurer agrees to waive the life insurance premium over a period of time if the insured is unable to work in their normal occupation as a result of accident or illness. There will be time limits over which the life insurance insurer will waive the premium and the insured may have to be unable to work for a period of time before the waiver kicks in.

Disability benefit. This is where the benefit is payable upon the insured being permanently disabled from being able to carry on their normal occupation. This option is a bit like adding a permanent health cover to the life cover and would be expected to substantially increase the premium.

Double accident benefit. This is where the policy will pay out double the death benefit sum insured if the death is caused as a result of an accident or specified type of accident.

Increasing cover option.  This provides for the insured to increase the sum insured at set points in time without the need for a medical.

Critical illness cover. This provides for a benefit to be paid if the life insured is diagnosed with a critical illness, from a pre agreed list, during the period of the insurance. The critical illness payment is an option to and not in addition to the sum payable on death. These polices can also be issued as stand alone policies. The list of critical illnesses does vary from insurer to insurer as does the cost.

Terminal illness cover. This option allows for the death benefit to be paid if the life insured is diagnosed as suffering from an advanced or rapidly progressing incurable disabling terminal illness, where, in the opinion of the life insurance office, the life expectancy will be less than twelve months. This option is usually withdrawn 18 month before the end of the period of the life insurance policy term. Terminal illness cover options are readily available. The argument for this type of option is that if the life insured is diagnosed as terminally ill then they have the advantage of  receiving the lump sum whilst still alive. The problem with that argument is that the life insured by that time may be too ill to enjoy the funds.

The author is Keith Clark who acts as a compliance consultant for Free to Work Consultancy. Keith is a Fellow of the Charted Insurance Institute.

This article was written on the 19th February 2007.

This article does not represent ‘financial advice’ as each persons individual requirements will be unique to their needs. If there is something in the article which you which to rely on then please check those details with any person from whom you purchase a term life policy at the time of purchase.

The views in this article represent those of the author and not those of Netbasic Limited.