There are different types of life insurance, each type is well suited to protecting different aspects of your life.
Each type of life insurance policy will also have its own set of benefits.
Continue reading to find out the benefits of each life insurance policy…
Term life insurance
With term life insurance you’ll be covered for a specified period of time (the term).
If you pass away during this time, your loved ones will receive a pay out from your policy.
If you don’t pass away during the term of your policy, your cover will simply expire.
You’ll pay a monthly premium and the price you pay will be calculated using the following information:
- Your age
- Your medical history
- Smoking status
- Level of cover
- Length of cover
Typically you’ll be offered term life insurance with either level or decreasing terms.
Level term life insurance
Level term life insurance provides a fixed pay out amount (sum assured), meaning your loved ones will always receive the same amount no matter when you pass away during the term of your policy.
Due to this, this form of cover is well suited to protecting an interest-only mortgage or other large debts, as well as being left as an inheritance.
Decreasing term life insurance
With decreasing term life insurance, your pay out amount will reduce over time.
This makes it an ideal option for protecting a repayment mortgage as you can have your sum assured reduce in line with your remaining mortgage balance.
Benefits of term life insurance
- Decreasing term life insurance tends to be the most affordable form of cover
- Flexibility to choose your cover length
- Cover length can be up to 40 years (this will vary between insurers)
- Ideal for protecting a mortgage
- Large pay out amount with level term life insurance
Whole of life insurance
A whole of life insurance policy will provide you with lifetime cover, therefore it’s a form of life assurance.
You’ll need to provide information such as your age, health and wellbeing and smoking status at the point of application in order for your premium to be calculated.
Premiums will need to be paid for the rest of your life in order to keep your cover in place.
For this reason, whole of life cover can become a costly option if you take a policy out at a young age.
This makes it a great option for those who’re later on in life but still in good health as you can secure a greater sum assured than with an over 50s plan.
A pay out from a whole of life policy can be used to cover any large expenses or can be left as an inheritance for your loved ones to enjoy.
Benefits of whole of life insurance
- Covered for life
- Loved ones guaranteed a pay out upon your passing
- Greater sum assured than with an over 50s plan
- Sum assured remains level
Over 50s plan
With an over 50s plan, there’s no need to provide medical information, anyone aged 50 - 85 is guaranteed acceptance.
This makes it ideal for those in this age bracket who have struggled to secure life cover due to less than favourable health.
It’s likely your sum assured will be capped (often at £25,000).
This makes a pay out from an over 50s plan ideal for covering funeral costs.
Insurers will also often add a ‘waiting period’ to your policy. This refers to the first 12 – 24 months of your policy where if you pass away due to natural causes, a pay out won’t be made.
However, any premiums paid into the policy will be refunded.
Benefits of an over 50s plan
- Guaranteed acceptance for UK residents aged 50 – 85
- No medical information required
- Affordable cover for those later on in life
- Covered for the rest of your life
- Loved ones guaranteed a pay out
At Reassured we can compare all of the above policy types from some of the UK's leading providers.