If you have recently started doing research into how Life Insurance works to help you find the best protection for you and your family. Have you found all of the information a little overwhelming? At Life Insurance Cover we would like to reassure you that although comparing Life Insurance policies can be quite a daunting task. You have taken the first important steps to protect yourself and your loved ones for the future.
However, because each policy is created to suit an individual’s circumstances and each insurer has many different policy types available. It can get quite confusing and even the best-intentioned people can get disoriented by the wide variety of different choices available to them. That’s why at Life Insurance Cover, we have taken the time to create extensive guides. Our experienced advisors ensure that making Life Insurance accessible and understandable for everyone who thinks they might need a Life Insurance policy.
In today’s guide we take a look at some of the most common types of Life Insurance. Including the circumstances where they might be appropriate:
Who Needs To Get Life Insurance?
Life Insurance is essentially a policy which will offer a financial safety net for family members and loved ones. By financially protecting those who depend on you will offer reassurance and peace of mind for the long term future.
One of the first steps when looking at who needs to get Life Insurance is to consider is, who has the most need to get insured? By identifying who needs to be protected by a Life Insurance policy will also identify if just one person (a single life policy) or both people (a joint life policy) is required. This decision will help you to identify any potential problems like:
• Cost: A Joint Life Insurance Cover policy will be more expensive than a policy for one person. However, it will usually be cheaper than two single life policies.
• Financial Impact: Would the loss of one person’s financial income be greater than the other? Even two people in similar situations can have different Insurance protection needs.
• Ongoing Medical Conditions: If both joint policyholders are fit and well, the monthly premium cost will be low. However, if one person has a diagnosed long term medical condition, it can increase the cost of a joint Life Insurance policy.
• Existing cover: Does one partner already have Life Insurance protection through work or a previously purchased policy? This could make Single Life Insurance a better option for the individual who does not have Life Cover.
Which Type Of Life Insurance Should I Choose?
After taking the important step in discovering who would benefit from buying a Life Insurance policy. You will need to identify and decide what a policy will need to protect for the future. This will also determine how long a Life Insurance policy will need to be in place for.
By using an FCA regulated broker, like Life Insurance Cover who compares Life Insurance Quotes from all of the UK Life insurers. Can help you to identify which policy would be best for your families’ individual circumstance. Unlike some other providers who might be restricted to one Insurer or a handful of policy types. Our ability to search all of the providers can help you choose Life Insurance to match your budget and circumstances, without restriction. The most common types of Life Insurance protection include:
Should I Choose Level Term Life Insurance?
A Level term Life Insurance policy is a very straightforward to understand and apply for. You simply choose the amount of years that you want the policy to run for and the benefit amount. For example, if you choose Life Insurance protection for 20 years and you would like you’re loved ones to receive a sum insured amount of £200,000. If you were to pass away during the policy term, the Life Insurance policy would make a claim payment to your family and loved ones.
This type of policy is very easy to understand in the fact that the benefit amount/sum insured remains the same or Level during the term of the policy. A Level term policy can help cover the costs of most common living arrangements. Many people choose this type of policy to cover fixed sums like the outstanding capital on an interest-only mortgage. Or you may choose to create a long term legacy to provide financial security for your loved ones.
Is Decreasing Term Life Cover Better For Me?
Although similar to a Level Term policy because it is for an agreed fixed period of time, it is radically different in how it protects policyholders. A Decreasing Term Life Cover policy will reduce in coverage each year. Which means that if you were to obtain £200,000 of protection for 20 years and a claim was made in the 10th year of the policy, the claim payment would be £100,000. The reason Decreasing Term Life Insurance is popular is its affordability and how it can mirror a mortgage. Because a Mortgage or Large financial responsibility takes time to pay off, the more you pay, the less remains to be paid. So with a Decreasing Term policy, you wouldn’t need the same level of claim payment towards the end of the mortgage as you would in the early years.
A Decreasing Term policy is usually cheaper than Level Term Life Insurance premiums because the risk reduces over time. An important point to remember is that your monthly premiums will remain the same over the policy term. This policy type is usually beneficial if you have a young family or people who depend on your income to cover the mortgage if you died, but their other expenses are under control, this could be a good option.
Should I Choose Whole Of Life Insurance?
Commonly referred to as Life Assurance, as the policy type suggests, this level of protection cover will protect you for the rest of your life. Due to the volume of Life Insurers who offer this level of protection, some may require monthly premium payments throughout your life. However, it is important to note that not all providers are the same and some providers offer Whole Life Cover and have a cut-off date for paying premiums.
Premiums for this policy type tend to be higher than other levels of protection because it is a guaranteed claims payment for your family and loved ones. A Whole Of Life Insurance policy is usually beneficial for people over 50 years old. This is due to the affordability and easy acceptance for people with ongoing medical conditions.
By using an FCA regulated broker like Life Insurance Cover who can compare Life Insurance Quotes from all of the UK Life Insurers. This can help you choose Life Insurance that will benefit you and your family for the future.
What Is Family Income Benefit?
After making the important decisions on how much Life Insurance you choose and the type of protection you need. Another important policy choice is the type of payment that your family and loved ones would receive. With Level Term and Decreasing Term Life Cover policy you can choose if your family will either receive a large lump sum or monthly income.
By choosing a Family Income Benefit to cover the monthly household outgoings does have a few potential shortfalls. This is due to the monthly payments only being paid to family members if you pass away during the policy term. For example if you were to have a 20 year policy. A total benefit amount of £200,000 and you passed away during the 10th year of the policy. Your family would receive a monthly benefit for the remaining 10 years which could be less than a standard policy type.
If it’s the loss of your monthly income that would cause the greatest financial impact on your family. Rather than any more permanent assets like a family home. This is a good choice of Life Insurance to keep them protected in the long run. Monthly premiums tend to be very similar to standard Term Based Life Insurance.
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Choose To Protect The Future For Your Family
As detailed above in choosing the right type of Life Insurance policy. The most important thing is getting the type of policy and benefit amount just right for your circumstances. By making the important choice to get the best type of Life Cover that will fit your monthly premiums into your budget. Will offer peace of mind to you, knowing that by protecting today you have provided for the future of your family and loved ones.
By choosing to use an FCA regulated broker, like Life Insurance Cover can help you to find the best type of Life Insurance by comparing Life Insurance quotes. By searching all of the UK Life Insurance companies in one simple search will help to the best policy available for you and your family.