There are several different types of Life Insurance that are available to you: they’re not all as complex as they sound. Below we’ve created a quick guide to the main types of Life Insurance that are available to you, but bear in mind that your own policy will be specifically customised to your circumstances. Contacting a broker is a good way to get advice on which is best for you.
You may discover that you have Life Insurance through your employer; this is called death-in-service benefit which generally pays a sum of money four times your usual annual salary if you die while still working. This can be valuable, but may not cover everything you need it to cover, and it will not last beyond your employment, whereas other types of Life Insurance may be more suitable if you won’t be in employment for a prolonged period of time.
A Whole of Life policy is just that – insurance cover for the rest of your life. Whole of Life Insurance, or as it should be known, Whole of Life Assurance, ensures that a sum of money will be paid out in the event of your death. As Whole of Life Assurance is 100% guaranteed to pay out, the premiums are generally higher. But many people prefer this type of Life Insurance because it takes away all the hassle, stress and wasted time spent renewing Life Insurance and worrying about any periods where you are not covered by a Life Insurance policy.
You may find that Term Insurance is more suited to your situation, where you only pay for insurance for a set period of time, for example 2 years, and a sum of money is paid out on the event of your death. This may be beneficial if you are on a budget, or you can only guarantee that you will be able to pay the premiums for that specific period of time. Other people may choose to take out Term Life Insurance for 25 years from when they have their first child, so that should anything happen to the parent the child will be covered, but the insurance won’t continue after the child has become financially independent.
Decreasing Term Insurance means that the pay-out gradually gets smaller over the period of the term. This can be useful if you intend the money paid out to cover any debts you’ve left behind once you’re gone. The idea being that over the period of time you’ll gradually reduce your debts meaning the end pay-out will not need to be as large should you die.
Level Term Insurance means that the amount of money paid out, if you should pass away, will remain the same amount no matter when you die as long as it’s in the set time period of the policy.
To take out a joint policy means that you’ll share your policy with another person, most likely your partner. This would mean that you’d both be on the same plan with the same terms and conditions, whereas on single policies this would be entirely separate; a claim made on one of the policies would have no impact on the other policy if they were separate. There are some issues that can arise from this type of policy, so it’s important to go through the plan with one of our expert advisers before you commit to this policy with another person.
The idea behind these types of Life Insurance for over 50s is that anyone over the age of 50 will be accepted no matter their medical conditions, as you’ll never have to go through a medical report. There is no end date to this policy, but the drawback of this is that you could be paying a lot of premiums for a very long time, meaning the claim that pays out at the end of the policy may be less than the total cost of all the premiums.
A family benefit plan is very similar to Term Insurance. But, instead of a sum of money being paid out to your family or loved ones in the event of your death, regular payments are made instead. This means that you can be sure the money will last for a prolonged period of time, as you can specify when you want the payments to begin and end. This will be useful as it means you can be sure that the money won’t be spent unwisely or thrown away all at once.
Mortgage Life Insurance means that you can protect your mortgage should you pass away. In the event of your death the mortgage debt would be paid off and the family home would be retained for anyone that you want to leave it behind for. This would be beneficial if you’re family are financially dependent to the degree that they can support themselves with minimal help, by leaving them a house with no mortgage you’ll be sure that they’ll have a safe place to reside in.
There are several types of Life Insurance available, and by talking to Active Brokers’ expert advisers you can be sure that you’ll find the right one to suit your distinct needs.