What is Life Insurance?
Life Insurance (also known as Life Cover) is an insurance policy that can help provide your loved ones financial security if you pass away during the policy term. Expenses such as; household bills, mortgage payments or general necessities could be covered by the payout. You will choose the cover you need and how long you want to be covered for.
The cost will vary depending on:
- Age
- Health
- Lifestyle
- If you smoke
- The policy term
The younger and healthier you are, the cheaper your policy will be as you are ultimately less likely to die. It’s important to note that there are different types of Life Insurance policies which contain very different benefits.
Different types of Life Insurance
Level Term
Level term life insurance is a protection policy where your amount of cover doesn’t change and stays “Level” throughout the duration of your policy term. Therefore, your premiums will be fixed for the term, this means that the prices you will pay won’t change as your policy progresses.
Decreasing Term
Decreasing term life insurance has one significant difference, the amount of insurance reduces over time, usually in line with your mortgage repayments. This insurance product is designed to pay off your outstanding mortgage balance if you were to pass away, whilst ensuring you’re not paying for cover you do not need or want. It’s sometimes called mortgage protection.
Increasing Term
Increasing term life insurance (also known as indexation or index-linked protection) is a protection policy designed to increase in line with the rate of inflation. This means that both your pay-out cover amount and your monthly premiums will rise as the rate of inflation does over the term of your policy. An increasing term policy provides you with the financial security of countering the effects of the rising costs of living.
Joint Life Insurance
Joint Life Insurance, also referred to as Joint Cover, describes one policy which is taken out in the names of two people, usually a married, civilly married or cohabiting couple. Joint Cover Life Insurance can be chosen as a feature on any standard Life Insurance policy.
