Life Insurance
No one likes to think about what would happen if they died, but sometimes we have to do just that. With the loss of your income, your dependents (eg. wife, husband, unmarried partner, elderly or incapacitated relatives, or children) would probably find it hard to manage. Life insurance is an insurance policy which pays out if you die, providing your dependents with financial security, and may also pay off a mortgage loan.
You need to decide on the guaranteed amount of money that will be paid out on your death (the sum assured), and the length of time that the policy will run (the term).
A good life insurance policy will:
- provide income if the principal earner dies
- pay for other short-term costs, eg. funeral expenses, taxes
- pay long-term costs, such as a child's university education or a partner's needs after retirement
- provide income if a non-working partner dies which means the surviving partner needs to hire a housekeeper, nanny, gardener, etc.
For more information, and a free quote, visit Best UK Life Insurance.
Types of life insurance policy
Life Assurance (permanent, investment)
This policy will definitely pay out.
An Endowment policy will pay out at the end of a specified term or on death if that occurs within the term.
A Whole of Life policy builds up a cash value which pays out on death, whenever that occurs.
Term Insurance (temporary, protection)
This is the simplest, cheapest and most usual way to buy insurance cover, and is a good way to protect your dependents.
A lump sum (the sum assured) will be paid in the event of your death, but only if death occurs during the specified term. If you survive, it will pay out nothing. You can take out term insurance on a single or joint life basis. Some plans may have extra benefits, such as paying out during the term of the policy, on the diagnosis of a terminal illness.
Types of term life insurance
Level Term Insurance - pays out a sum if you die during the term.
Increasing Term Insurance - pays out a sum on death. The amount, and your premiums are increased from time to time, eg. with inflation.
Decreasing Term Insurance - (Mortgage Protection) pays out a lump sum on death, but the amount decreases as the term progresses. This is a good way to protect a loan or repayment mortgage, where the balance decreases as you make repayments.
Family Income Benefit - pays out a regular income for the rest of the term following death. The amount can stay the same or increase every year.
Increasable term insurance - pays out a sum on death which can be increased, eg. every year or on the birth of a child.
Renewable Term Insurance - allows you to extend the policy at the end of the original term.
Convertible Term Insurance - lets you convert your policy from term insurance to an investment type of life insurance.
Critical Illness Cover - pays out on the diagnosis of a critical illness.
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