Finding the right policy might seem daunting as there are many different types of life insurance. At Bequest, we aim to educate you on all things life insurance so you are able to get the cover you need. Here is our buyer's guide to the types of life insurance policies! 🙌
Why do you want to buy life insurance?
Thinking about your reasons for taking out a life insurance policy might help you decide on what type of cover is best for you.
Use life cover to help your family after death
All types of life insurance provide peace of mind for your loved ones as it means they are supported financially after you pass away.
Pay off a mortgage or other debts
If your reason for taking out a life policy is to cover your mortgage if you pass away before paying it all off, decreasing term life insurance might be the right policy for you.
Find out more about decreasing life insurance by reading this article: Mortgage Life Insurance: Decreasing Term Cover for Your Home (https://bequest.com/articles/life-insurance/mortgage-decreasing-term-cover/
Fund university or studies for your children
Funding children's education as a parent is another popular reason to take out a life policy. By leaving financial support for your children, they will be capable of receiving the education they wish for.
Pay for your funeral costs
Did you know that the average cost of a funeral in the UK is £3,946 for a cremation and £4,893 for a burial? This cost could come as a huge financial impact for your loved ones if the costs of your funeral are not planned for. Taking out an insurance policy can ensure these costs don't hit your loved ones during an already painful time.
If you'd like to read some more about planning for your funeral, check out our article on planning your own funeral.
How does life insurance work?
Each life insurance policy works a little bit differently, but to get the gist, we'll give you a simple explanation. You simply apply for your policy and choose the amount of cover you want. You then pay your premiums until you pass away which is when your beneficiaries receive the life insurance payout. 💛
What types of life insurance policies are available?
There are many different life insurance policies, here are some brief explanations of the different cover types.
Term life insurance policy
Term life insurance is a type of cover that protects you for a specific term of your life. This is often seen as the cheapest life insurance option simply because you can purchase it to over a relatively short period of time. This is the type of life insurance that provides peace of mind for you and your loved ones. 😇
Decreasing term life insurance
Decreasing term life insurance policies are the perfect type of cover if you're looking to pay off your mortgage if you pass away before doing so.
With decreasing term life insurance, your premiums and payout decrease typically at the same rate as your mortgage gets paid off. This means that if you pass away during your life insurance term, the pay out is the same as your outstanding mortgage.
If you want to read a bit more about decreasing insurance to cover your mortgage, check out our article about life cover for a mortgage.
Level term life insurance
Level term life insurance is a great policy if you are looking to provide financial support for your loved ones if you pass away during your specific term.
With level term life insurance, your premiums and payout stay the same over the duration of your term. It's normally used to provide financial protection to your loved ones after you pass away.
If you want to read some more about level term life insurance, check out our article. 👈
Whole of life or permanent life insurance
Whole of life insurance, also known as permanent life insurance, is a type of permanent life cover. This policy covers you for your entire life which means if you pass away, your loved ones are almost guaranteed a payout, however, whole of life policies do tend to be on the more expensive side.
With whole of life insurance, you pay your premiums for your entire life and when you pass away, your beneficiaries receive a payout to help them financially.
If you want to read some more about whole of life insurance, check out this article.
Over 50s life cover
As the name states, over 50s life insurance is a life cover policy for those over 50. It's a great way to give you and your loved ones peace of mind that they are supported financially when you pass away.
having over 50s life insurance cover means you typically pay your premiums until you pass away, then your beneficiaries will receive a pay out.
If you want to read some more about over 50s life cover, check out our article called Over 50s Life Insurance.
Family income benefit
Family income benefit is a lesser-known type of life insurance that is designed with families in mind.
It can be compared to decreasing term life cover, because instead of receiving a lump-sum payment upon your death, your family would receive monthly payments to mimic your monthly income.
If you want to read some more about family income benefit, read that article.
Critical illness cover or terminal illness cover
It's important to not get critical illness cover and terminal illness cover mixed up.
Terminal illness cover pays out when the policyholder is diagnosed with a terminal illness, usually with 12 months left to live. Critical illness cover covers you for a range of specific critical illnesses, in the case of being diagnosed with one of these illnesses, you would receive a pay out.
Click here if you want to read some more about critical illness cover.
Which life insurance policy is best?
Finding the right life insurance policy is completely personal to you and your circumstances. 💯
If you're looking to cover your mortgage, decreasing life cover could be for you, if you're looking to provide financial support for your loved ones, a level term policy might be perfect for you.
At Bequest, we offer term life insurance to ensure you and your loved ones peace of mind. There's no better way to provide financial support for your family after you're gone than taking out a life insurance policy. Get your quote today. 👏
Should I buy a single policy or joint life insurance?
By purchasing two single life insurance policies, your loved ones will receive two pay outs instead of one after you and your partner both pass away. If you have a joint life insurance policy, you could be left with no cover after your partner passes away. This is why we recommend buying a single life policy.
What is universal life insurance?
Universal life insurance is a type of permanent life insurance that provides lifetime coverage. Unlike most other life cover policies, if you cancel your universal policy, you will receive the policy's cash value.
What about renewable term life insurance?
Renewable term life insurance is an optional add on for some life policies. It allows you to extend your policy once it has ended, it's a great way to extend your cover without having to take out a new policy entirely.