When it comes to life insurance, The Cheapest Life Insurance knows that it can be very difficult to know what kind of life insurance to buy but also how to buy it.
We are all very used to being able to buy online of course, but with life insurance sometimes it’s just nice to speak to someone to get a better understanding of what we are covered for.
Therefore, in this series of articles, The Cheapest Life Insurance is going to give you all the information you may need on how to buy life insurance, including types of insurance, potential pitfalls and how to get the cheapest life insurance deals for the best level of service.
What kind of life insurance policy should you buy then?
For many people, there are two areas that require protection and these are:
- Something to pay off a mortgage or other large debt with
- Family protection – whereby you want to leave a financial legacy behind for your family when you die.
Depending on what your personal needs and circumstances are there are a number of life insurance policies that may be suitable.
Term assurance is perhaps one of the simplest levels of life insurance. Essentially you choose the amount of money you would like to be insured for and then the length of time you would like that insurance in place. If you die within the term then the policy you have will pay out to your beneficiaries. It’s important to note though, that if you do not die then the policy does not pay out anything and the premiums you have paid will not be given back to you.
Within term assurance, there are two types of insurance you may want to consider. These are level-term insurance and decreasing-term insurance. Depending on your circumstances, you may benefit from having a combination of both.
With a level-term life insurance policy your family or beneficiaries will receive a lump sum if you die within a pre-determined time. The amount you are covered for will remain the same throughout the term of your insurance and usually your monthly premiums will stay the same during the life of the policy as well.
For family protection, a level-term life insurance policy can be a good idea – especially if you would like to leave your family a financial legacy after you’ve gone to cover their needs or any plans you may have made. Sometimes a level-term life insurance policy can also be good for interest only mortgages that are not covered by an endowment policy.
This type of policy means that your life insurance cover amount decreases over the life of the policy. Decreasing term life insurance can be useful for debts that reduce over a period of time, like repayment mortgages.
The premiums associated with decreasing term-life insurance are usually much cheaper than for level-term insurance and are also useful if you are interested in inheritance tax planning.
Whole of life insurance is a policy that will pay out when you die. As it’s for ‘whole of life’ this means that it could be a more expensive option than something like term assurance, but it is a guaranteed payout to help with costs of a funeral for example.