What difference types of life insurance are there?

We are just starting out in a new home and I have come across different types of life insurance products and am really not sure which way to turn? What is available and what are they designed to do?

Question asked by Nik Manches
Compare Top 10 UK
 Protection
Insurers
 
Takes approx. 60 seconds
Type of Policy
Level of Cover
Date of Birth

Answered by Andrew Jenkinson

A guide to the different types of Life Insurance on offer

There are a range of life insurance policies available which are designed to protect you at different stages in your life whether it be protecting your mortgage, children or funeral costs. It is important to understand the difference so you can ensure you choose the most suitable policy at these life stages.

All life insurance policies are designed to pay out a benefit on death, some pay a lump sum while others pay an annual or monthly income. The main types of life insurance you will come across are as follows:

Level Term Life Insurance

Level term cover is one of the simplest forms of life cover, you set a length of time you want to be covered and decide on a level of cover you would want your loved ones to receive should the worst happen.

During the policy term should you pass away your loved ones will receive the cash lump sum to help them financially during such difficult times. The lump sum can be used however they wish, whether that is to pay off a mortgage, other debts or simply to help maintain their lifestyle moving forward.

Decreasing Term Life Insurance

Similar to level life insurance this term assurance product provides your loved ones with a lump sum cash payment on death. The difference is that the level of cover which you choose from the outset will decline over the life of the policy. The most common use for decreasing cover is to protect a repayment mortgage as the level of life cover will decline over time in line with the reducing mortgage loan.

 

image

Whole of Life Insurance

Whereas level and decreasing terms assurance only pay out if you pass away during the term of the policy, whole of life insurance will pay out whenever you pass away providing you maintain your premiums.

The most common uses of whole life insurance include covering funeral costs and inheritance tax planning.

Family Income Benefit

Probably the most under-utilised of life insurance products, family income benefit pays a monthly or annual income to the deceased’s beneficiaries should the policyholder pass away during the term of the plan.

It is the most cost effective way of maintaining your loved ones standard of living.The most common use is to protect your children’s standard of living to an age where you would expect them to be financially self sufficient.

Mortgage Life Insurance

This is a specific form of term assurance designed to protect an outstanding mortgage, whether this be an interest only or repayment mortgage.

Mortgage life cover provides a number of additional benefits specific to mortgages, such as moving day rescue services covering emergencies and free life cover between exchange of contracts and completion of your property.

Relevant Life Insurance

A recent addition to the life insurance family this is a tax efficient policy for a single employee or director. It is a simple level term life insurance product which is placed in a specific trust to ensure it’s tax efficient. The premiums are tax deductible and any benefit payable should a claim arise is paid out tax free.

Get in touch

Naturally this is only a high level overview of the various policies which are available, if you want to know more about the types of life insurance available, please just give us a call for free advice on 0208 432 7333.

types of life insurance
 
decreasing life cover
 
level life cover
 
whole of life insurance
 
family income benefit
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 UK Insurers
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Life Insurance Questions

 
We have recently taking out joint life insurance off the back of our first mortgage, should this be...
 
I’m looking to take out Life Insurance and have read about an additional benefit called Terminal...
 
I’ve recently been declined Life Insurance due to a previous medical issue, it’s something...
 
I’ve recently gone self employed and need to replicate my old employee benefits. The main cover...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Kevin Paul
05/09/2017

Excellent service renewing our medical insurance, professional advice, good rates found and excellent professional after service, highly recommended.

Max Edgar
09/09/2017

Nadeem was brilliant. He was very patient and worked very well with me to come up with the best solution possible for my budget. Perfect solution. Thank you very much.

Aidan Smyth
11/09/2017

Dealt with me promptly and provided me with the most cost-effective option consistent with my requirements. Very pleased and thank you.

We are rated 4.9/5 based on 1129 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.93 / 5 Average
1,222 Reviews
A
Overall Rating
Really, really helpful! Stopped me from signing up with an unhelpful company, and did basically all of the legwork for me in signing up with the right one. I can't have been the most helpful client as I'm 19 and only just started looking into it last week, but he took all the questions in stride! Put up with me turning to ask my dad questions every 2 minutes as well. I was helped by 2 workers; Sam and Nick. Thank you very much to both!
L Finch
Overall Rating
Good communication and follow ups. Friendly. A thorough research for my insurance needs.
M
Overall Rating

Sam Barr-Worsfold was very helpful and provided excellent customer service. Sam discovered I was paying too much premium for my current cover. Sam recommended and helped moved to a new cover with lower premium that provided the level of cover (terms required stated in the provider's policy) I wanted. I recommend highly recommend Sam and Drewberry Insurance. Thank you Sam.
Anonymous
Overall Rating
Thorough, knowledgeable and great communication
Anonymous
Overall Rating
Went through each policy in detail and made sure I was getting the correct one for me