Term insurance is a policy that will cover you for a specified period of time (the “term” of the policy). There are two types of term insurance – level and decreasing.
Level term insurance is straight forward – when you make your application, you decide how much you want to pay each month or how much you want the policy to pay out (known as the “sum assured”) and how long you want the policy to last. You loved ones will receive the payout if you pass away during the term of the policy.
The sum assured – the amount that your loved ones will receive – stays the same throughout the policy.
The term of the policy is entirely up to you, but when deciding on how many years of cover you need, you should consider things such as:
- The ages of any dependent children, and how long it will be until they are able to support themselves financially.
- If there are any other family members who would struggle if you were no longer around to provide support (such as elderly parents or those needing care).
- If there are any significant debts that your family would have to pay off after you die.
Most level term insurance pays out a one-off cash lump sum. Your family won’t pay income tax or capital gains tax on a life insurance payout, but they might have to pay inheritance tax, depending on the size of your estate. It’s a good idea to write your life insurance policy into trust, which places it outside of your estate and means that the right people get the money when they need it most – it’s a simple process, and our advisers will guide you it.
Decreasing term life insurance is a type of life insurance that reduces over time. This is usually set in-line with debts i.e. a mortgage, which will reduce over the period of time of the agreement. Decreasing terms are cheaper than the standard term, but you’ll receive less of a pay-out the longer the policy exists.
Family Income Benefit
Unlike a traditional life insurance policy, family income benefit insurance is a type of policy which pays your loved ones a monthly payment until the end of the agreement instead of a lump sum.
You should work out how much your dependents need per month and agree that figure with your insurer. This is considered a decreasing term policy, because the total payments decreases with time.
Whole Of Life
A whole of life insurance is a policy, which covers you for the remainder of your life. Generally, it’s slightly more expensive than a term assured policy as it never comes to an end until you pass away. You will pay a monthly fee and upon your passing your loved ones will receive the agreed payment.
OVER 50’S LIFE INSURANCE
Over 50s life insurance is aimed at anyone between the ages of 50 and 80, who needs cover to pay for funeral expenses, or leave a gift to their loved ones.
Over 50s insurance is competitively priced – policies start at as little as £10 a month. There are often no medical questions during the application – you just need to be over 50 to get cover, making this ideal for anyone with pre-existing conditions or a more complex medical history.
Over 50s life insurance is a whole of life type insurance policy – as long as you make your payments, your loved ones are guaranteed to receive a payout. Many providers won’t ask you to pay your premiums after the age of 90 – meaning that you’ll have life cover for free once you reach a certain age.