There are many different types of life insurance available and the right one for you depends on your own personal circumstances. Taking out life cover is a big step and it’s wise to seek independent and impartial advice before committing to a policy.
The types of life insurance include:
Fixed or ‘term’ life insurance:
This kind of policy runs for a set number of years and pays out if you die within the term. It’s a good option if, for example, you want to make sure your dependants will be looked after financially to the age of 18 in the event of your untimely passing.
Whole of Life Insurance:
Whole of life cover runs continually, until you pass away. Therefore it is guaranteed to pay out but as a result premiums can tend to be more expensive. Whole of life cover is also known as life assurance.
Decreasing life insurance:
This type of term insurance and can be a smart option if you need to provide a decreasing level of cover throughout the duration of the policy. Potential pay outs reduce each year of cover to reflect a decreasing balance on something such as your mortgage, which is why it can be one of the cheapest life insurance options.
Increasing life insurance:
Increasing life insurance might be an option if you think you’ll require a greater amount of cover as the term of the policy goes on; such as to meet perhaps, university fees or if you’re worried about the cost of living rising dramatically.
Over-50s life insurance:
If you’re aged 50 or over, your circumstances are often quite different to those in your 20s, 30s and 40s, especially if you’re mortgage free and your children have left home. Your reasons for choosing life cover, therefore, might now be geared towards covering funeral costs or leaving behind an inheritance. Over-50s life insurance is guaranteed to pay out, so it is a kind of whole of life cover and as a result, the premiums often often tend to be higher. Many providers offer guaranteed acceptance without the need for a medical examination.
Joint life insurance:
If you are a couple, having a joint life insurance policy can work out to be cheaper than having two single policies in place. But bear in mind that many policies will only pay out once, that being on the first death. Meaning that if the surviving partner requires any further cover, they will then need to take out a new single policy. Don’t assume you would only need single cover if one of you earns the income and the other stays at home with the children – because if the at-home parent were to die, the working partner might have to give up working or be able to meet expensive childcare costs.
These are set for an initial fixed term, after which the provider can review them if your circumstances change. The variability might not suit anyone on a budget.