Tue. Feb 27th, 2024

 Your loved ones not being financially secure if you were no longer around, is a fear many of us feel especially if we have young children. Having the peace of mind that you have read here life insurance in place that will provide a lump sum pay out for family members, can leave you feeling reassured and relaxed about the future. 

 There are different types of life insurance to suit different requirements and budgets. People secure life insurance typically to help cover costs for things like: 

  • Unpaid debts, such as a mortgage repayment
  • Household living costs (for remaining household members)
  • Funeral services
  • Childcare and education for children 

According to insurer Aviva, a survey of 500 people who had lost a partner in the last five years, for most families (65%), the partner didn’t have life insurance. This can cause financial hardship to those left behind.

Keep reading this 2023 guide, to discover the different types of life insurance and to find the policy perfect for you… 

Types of life insurance 

There are many types of life insurance policies available and there will be at least one suitable for everyone. The most common/ popular types are: 

Over 50sLevel term Decreasing termWhole of life
Covered for all of your lifeNo medical questions Guaranteed acceptance (usually 50 – 85)Level pay out Lower sum assured than other types of coverGuaranteed pay out upon passing Covered for a certain period (the term)Pays out if you pass away during the termUsually more expensive than decreasing term)Pay out remains the same during the termCovered for a certain period (the term)Pays out if you pass away during the termUsually cheapest type of life insurance (risk to the insurer reduces)Pay out decreases during the termCovered for all of your lifeGuaranteed pay out when you pass awayPay out stays the same Usually the most expensive type of cover

Which policy is best for me?

Everyone’s circumstances are different, therefore which policy is best for you is down to your lifestyle and what your financial responsibilities are. Here are some examples:

Over 50s – is a suitable option for those who are 50+ and may have less financial responsibility than they once had before. This policy could help cover a small inheritance or a funeral. The pay out can be lower than other options so if you are looking for a higher sum assured to cover more finances, a whole of life plan a may be better option. 

Level term – is one of the most popular options as it provides a large pay out potential and can help to cover family costs, a mortgage or other debts. Young partners or families usually opt for term life insurance when considering the future. If you are the breadwinner of your household, this may also be a good option as you can leave your family/partner financially secure should anything happen to you during your working life. Leading UK insurance broker Reassured have created this comprehensive level term life insurance guide if you require additional information on this specific policy type.

Decreasing term – especially ideal if you have a mortgage, as the pay out could decrease in line with your outstanding mortgage balance and end when your mortgage is paid off. It is also a cheaper option as your risk to the insurer reduces as time goes on.). 

Whole of life – a great option for seniors who require a larger sum assured than an over 50s plan. Best suited to those in good health, as it tends to be more expensive than other types of life insurance. Although, it does offer that extra reassurance knowing you are covered for life and not for a set period. 

It is important to consider the length of the policy when making a decision. For example, if you are looking to be covered for the rest of your life, whole of life or over 50s life insurance could be suitable. However, if you were looking to cover a mortgage then you may consider level term or decreasing term life insurance.

We have created this helped ‘Important Life Insurance Terms that Everyone Should Know’ guide if you are unsure of the key life insurance terminology.

How much is life insurance?

There are many factors that can affect the cost of your premiums. Not only will the cost be down to your desired pay out, but also to your lifestyle and health. Here are a few things that will be considered when your premiums are being calculated: 

  • Age
  • BMI
  • Health and wellbeing/ your own and family medical history
  • Your occupation and hobbies (potentially high risk)
  • Lifestyle (smoking or alcohol consumption) 

As well as some questions about you, the cost will also be determined by: the policy you are looking for, the cover amount and the length of the term. When shopping the market, if you use a broker or agent, they will also consider your budget when looking for appropriate life insurance plans for you. 

Can I get instant life insurance?

Yes, most of the time standard life insurance policies will cover you instantly (and should cover you for natural or accidental deaths as soon as your application is accepted.

Most insurers include an accidental death cover benefit if your application isn’t accepted straight away, which will pay out if you pass away due to an accident.

The only policy that typically doesn’t provide cover instantly is over 50s, as they have a 12-24 month qualifying period. Although if you were looking for immediate cover, term life insurance or whole of life insurance might be better options.

How to find the right life insurance 

No matter which policy you decide on, it’s important to shop around for quotes. This can help you find an affordable price for a suitable policy. There are a few methods commonly used, for example: using a broker, going direct through an insurer, or using a comparison website. 

If you need more help choosing the right type of life insurance, then using a specialist broker is a quick and easy way to find instant quotes.

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