Level term life insurance

The best term life insurance is a matter of personal choice. It will depend on your circumstances, budget and the type of financial commitments you want to cover.

A good place to start is by checking customer reviews of term life providers and doing a comparison to find suitable cover at an affordable price.

Yes, it’s possible to have more than one life insurance policy. For example, you could have a policy to cover your mortgage and another policy to protect your children financially while they’re growing up.

When the term ends, your policy will expire and there won’t be a payout. If you want to continue your life insurance cover, you’ll need to take out a new policy.

If you take out level term cover, you might be able to add an option to renew. This allows you to renew your cover at the end of the term, instead of arranging a new policy. There’s no need to undergo a health check either.

You need to add this option when you take out a new policy, not after it’s become active.

If you outlive the term of your insurance, your loved ones won’t get a payment when you die. Some providers may allow you to extend the term of your policy, although it’s likely you’ll have to pay a higher premium.

But before you extend the policy, it’s worth considering whether you still need cover.

It’s likely that your financial situation will have changed over the years. If your mortgage is paid off and your kids have grown up and left home, do you still need level term insurance? If you do, do you need as big a payout?

Yes, you can get level term life insurance with critical illness. Critical illness cover pays out if you’re diagnosed with a serious illness or injury that’s listed in your policy.

It’s usually cheaper to add critical illness cover to your life insurance the younger you are. 25 to 34-year-olds typically pay £59 per month, while 45 to 54-year-olds pay £111.²

Some pre-existing conditions won’t affect your ability to get life insurance. But others, such as cancer and heart conditions, could make it more difficult to find a policy. It’s also likely that your term insurance policy will be more expensive.

Typically, insurance providers will offer a grace period to allow you to catch up if you’ve missed a payment by accident. But if you don’t keep up your monthly payments the cover will end, and your policy won’t pay out if you die.

This will depend on how much the payout is and how much your estate is worth.

You can consider the option of putting your life insurance in trust. This means its value won’t be counted as part of your estate, so will be protected from inheritance tax. However, the money should still go to the people you want to receive it.

How long your life insurance policy lasts depends on what you want the cover for. You could choose life insurance based on how long your children might need financial support for if you were to die. Or you could take out cover that lasts as long as your mortgage.

You should review your level term life insurance policy regularly to make sure it still meets your needs. This is especially important after a major life change like marriage, new family members or divorce.

You should also check your policy is still right if you’ve had a substantial pay rise, moved up the property ladder or downsized.

Joint level term life insurance can be cheaper than taking out separate policies for you and your partner. Joint policy holders typically pay £80 a month for level term cover, while a single policy costs £40.²

But most joint policies only pay out once – when the first person dies. With separate policies, when one pays out, the other policy will continue.

And think about what you’re looking to protect. With a joint policy, you get the same level of cover for the same length of time, which could be ideal for a mortgage. But if you have different financial responsibilities, a joint policy could leave one partner with too much or too little protection.

Yes, it should be possible to cancel your level term life insurance policy at any time. But unless you’re still within the policy’s cooling-off period, you’re unlikely to get a refund on premiums already paid. And there won’t be a payout if you die.

Cancelling a life insurance policy is a big decision, so you may want to speak to a financial advisor about it first. Another option is to amend your policy rather than cancelling it altogether.

In many cases, you can change your life insurance policy at any time, although it may depend on the provider and type of amendment you want to make.

Some changes, like updating beneficiaries or reducing cover, are relatively straightforward. Others, like increasing cover, could raise your premiums or require a new health assessment.