The Different Types of Life Insurance

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If you have people who depend on you financially, be it a mortgage for a home or everyday spend and bills then you should really consider having life insurance if you don’t already do so.

This type of insurance gives you and your loved ones peace of mind should the worst happen. What’s more it doesn’t cost much with plans usually starting from £5 a month or just 20p a day. Plans are affordable to everyone and no medical is required with most applications.

There are a few different types of life insurance to cover different scenarios and which one you need depends on what you want to cover. Below we explain the various options available to you so you can see which is the most suitable for your needs.

Critical Illness Life Insurance:
This is usually an extra add on with your life insurance. It covers you by paying out a lump sum if you are diagnosed with a critical illness as defined by the policy. It is meant to help you and your family survive financially should your income stop due to you not being able to work. This allows you to focus on your health.

Life Insurance:
This is the most basic of cover and a lump sum is paid out if you die during the terms of the policy. If you have a joint policy the lump sum is paid out to the surviving partner. This is often called fixed term insurance also.

Over 50’s Life Insurance:
This type of insurance allows you to leave a guaranteed fixed lump sum to your loved ones when you are no longer around. You need to be over 50 and usually under 80 to apply though most firms tend to accept people aged 70 and lower. Usually there is no medical as well so it can be started online from your own home instantly. You usually pay fixed premiums and have a fixed pay-out agreement. Some companies have a qualifying period so if you die in the first year or 2 you only receive what you paid in premiums back not a lump sum.

Term Insurance:
Often also called term assurance this is a policy that guarantees your family a payment if you die within a specific time period. Premiums tend to be lower as it’s a set term. You might choose it to cover your mortgage duration or until the kids have left university etc. Sometimes also knows as level term assurance.

Whole of Life Insurance:
This policy means when you die your family or loved ones get a cash payment. There is no fixed term and the premium is for the entire duration of your life. The policy ends only when you die. Usually the pay-out amount stays the same so when you take out the cover if you request £200k then the pay-out is £200k even if it’s 20 years later.

Joint Life Insurance:
If you are a couple then you should consider taking out a single life insurance policy that will out in the event of one of you dying. This could be cheaper then 2 separate policies also. Normally the policy pays out on the first death then the policy and cover ends. If you don’t want this to happen then having 2 sperate policies is the way to go.

Mortgage Life Insurance:
If you want to cover your mortgage payments for your family in the event of death then mortgage life insurance does this. It’s a policy that the cover reduces for over the policy term. Usually for the same term period as your mortgage has left.

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