Life insurance

One of the most popular types of life insurance is called ‘term’ insurance. This pays either a lump sum or a regular income if you pass away within an agreed period (or 'term'), depending on the type of policy as explained below;

The two main types of term life insurance cover are: level-term insurance and decreasing cover insurance.  
 
Level-term insurance covers people for a period of time and typically offers a fixed lump sum of money to a dependent if you pass away during that time period. You could choose this to ensure your financial commitments, such as childcare costs, can still be paid. 

Decreasing cover is a type of insurance that’s often (but not always) bought to clear a specified debt that itself decreases over time. This type of cover is often taken out to cover mortgage repayment costs. 

There are many other types of life insurance to think about, including critical illness cover and whole of life insurance.

The level of life cover that’s right for you will depend on your personal circumstances. There are many options including: whole of life insurance, over-50s cover and joint life policies so it's important to compare quotes and find the right deal for you.

1. Whole of life insurance – this type of insurance guarantees a pay-out as it covers a person for their whole life. If your health deteriorates then your premium won’t be affected. However, these policies tends to be more expensive than others. Please note we do not offer this type of policy.
2. Over-50s plans – tend to offer a smaller pay-out to cover things such as funeral expenses. The amount you pay for your premium is guaranteed so it won’t go up or down. Please note there may be a deferral period before you can make a claim. 
3. Joint life policies – these are often chosen by couples. You choose an amount of cover, which is paid out in the event that you or your partner passes away during the term of the policy. These types of policy would pay out once, so upon the first claim the policy would then end. 

The right level of life insurance cover for you will depend on your personal circumstances. Typically, the more cover you take out, the higher your premium will be. However, if you underestimate how much money your dependants will need if you die, then you could leave your loved ones short.

Some experts say that a cash sum equal to ten times your annual salary is a good starting point. Our easy-to-use life insurance calculator can help you work out how much cover you might need.

The cost of your premium is based on the sum you’re looking to be covered for, the length of the policy, and whether or not you would like any add-ons such as critical illness cover. Each provider will have their own set of criteria that determines how your premiums will be calculated.  

When you apply for life insurance, you’ll be asked a set of questions to help providers identify the risk they’re taking on – i.e. how likely it is that they’ll have to pay out. Once you have selected your preferred insurance provider, expect to be asked your age, weight, and medical history, along with lifestyle factors such as how much you drink and whether or not you smoke. 

That’s really up to you and will depend on your circumstances when you’re looking to buy life insurance cover. Paying annually can be a cheaper option as interest could be charged on monthly instalments – so you could save some cash if you can afford the up-front payment. Before deciding on any type of payment plan, you should work out whether or not you’re able to pay in a sufficient amount to cover the duration of your policy.

Whatever your age, as an adult it’s always a good time to start thinking about life insurance. In particular people with loans, mortgages and financial dependents should consider getting a life insurance policy. 

Although it’s common to get a new policy after a major life event – such as having a baby or moving house – it can be a good idea to buy life insurance sooner rather than later. That’s because providers tend to think of younger people as less risky, as they’re more likely to be healthy and therefore less likely to claim. So, you could be offered a cheaper insurance premium. 

There you have it. Whatever stage of adult life you’re at, there isn’t a better time than now to shop around for peace of mind.

1. Buy life insurance through Compare the Market (online only, not applicable for sales made over the phone through LifeSearch)  T&Cs apply.
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