There are multiple life insurance policies on the market; which one is best for you will be one that covers everything you’d like to protect and fits within your budget.
Most commonly, you’ll have the choice of:
- Term life insurance
- Whole of life insurance
- Over 50s plan
- Family income benefit
You can also choose to take out a policy out on a joint basis - meaning both lives will be covered under one policy.
Depending on your budget, it may be more suitable to take out two separate policies.
But how do these policy types work and what are they best for protecting?
Term life insurance
Term life insurance will provide you with cover for an agreed period of time (the term), this can be up to 40 years (depending on the insurer).
If you pass away during this time, a pay out will be made to your loved ones.
Typically, you’ll choose between level or decreasing terms.
With level term life insurance, your sum assured remains fixed throughout the term of the policy.
Due to the large pay out, level term life insurance is well suited to protect an interest-only mortgage or other large debts, covering family living expenses or it can provide an inheritance for your loved ones to spend how they wish.
With decreasing term life insurance, your sum assured will reduce throughout the lifetime of the policy.
For this reason, it’s ideal for protecting a repayment mortgage as you can choose to have your sum assured to reduce at the same rate as your remaining mortgage balance.
Term life insurance can be taken out on a joint basis.
Whole of life insurance
Whole of life insurance is a form of life assurance as it provides lifelong cover.
Once a policy has been taken out you’ll be covered for the remainder of your life.
As you’ll be required to continue making premium payments until you pass away, this can be a costly option if you take out a policy at a young age.
Therefore, whole of life insurance tends to be well suited to those who are later on in life and still in good health.
The pay out can be used to guarantee your loved ones an inheritance and ensure they have the funds to pay for your funeral.
As your loved ones are guaranteed a pay out, whole of life cover can’t be taken out on a joint basis.
Over 50s plan
An over 50s plan offers guaranteed acceptance to UK residents aged 50 – 85.
You won’t be required to provide any medical information, so this is an ideal option for those in this age bracket who have previously struggled to secure cover due to poor health.
To compensate for this unknown risk, your sum assured will be capped (typically at around £25,000).
Insurers may also add a waiting period to the terms and conditions of your policy.
A ‘waiting period’ refers to the first 12 – 24 months of your policy where if you pass away due to natural causes, no pay out will be issued.
However, any premiums paid into the policy will be refunded.
Unfortunately, an over 50s policy can’t be taken out on a joint basis.
Reassured can compare all of these policies on your behalf, helping to you save time and money - simply get in touch for your free quotes.
Family income benefit
Family income benefit is an alternative form of life insurance.
Instead of receiving a lump sum pay out, your loved ones will receive monthly (tax-free) income payments.
You’ll be covered for an agreed period of time and if you pass away during the time, the payments will commence.
Budgeting a large sum of money can bring added stress to a grieving family.
This is were family income benefit can be extremely beneficial as your loved ones will easily be able to budget their payments.
Family income benefit can be taken out on a joint basis.