What levels of cover are available?
There are two main types of life insurance – term life insurance and whole of life assurance. Which you choose, will depend on a combination of what you need and how much you can afford.
Term life policies cover an agreed period of time such as five, ten or 25 years. You’ll pay premiums throughout that period and if you shuffle off this mortal coil within that time, your beneficiaries will receive a payout. However, if you don’t end up pushing up daisies (hooray) you won’t receive anything and you won’t get your premiums back either.
Under term life policies, there are two options available – level term life policies where the amount of money you’re covered for is the same throughout the agreed period (hence the name ‘level term’) and decreasing term policies – offering cover that decreases over the agreed period. Decreasing term cover may be a good option if you have a repayment mortgage and the amount decreases over time. Premiums for decreasing term policies are usually cheaper than for level term policies.
Whole of life policies on the other hand are more expensive in general. As long as you continue to pay into your policy, this type of cover will pay out regardless of when you pass away, however you may need to speak to a financial advisor to get this type of cover.