Life insurance options in the UK
There are many different types of insurance available in the UK, and one of the most common ones to be taken out by consumers is life insurance. Life insurance is designed to provide financial protection and security to your loved ones in the event that you die during the term of the cover, which means that you can enjoy peace of mind in knowing that if something happens to you your family will not have to cope with the stress of financial losses as well as the loss of a loved one.
Having a good life insurance policy in place is important for most people, and there are a number of choices available to those looking for this type of cover. The cost of life insurance can vary depending on a number of factors, such as the type of life insurance cover you opt for, your age and health, the provider that you select, and various other factors. It is a good idea to shop around in order to find the right insurance policy, as both the terms and conditions and the price can vary from one provider to another.
When a person dies the family has enough to cope with in terms of stress and grief. However, often there is an underlying worry that also affects the family of someone that has died, and that is the loss of an income – particularly if the decedent was a main income earner. Although it can’t make up for the loss of a loved one, the payout from life insurance can make life a little easier for those left behind, and the lump sum payment can be used towards things such as paying off some or all of the mortgage, paying for funeral costs, putting money aside for education for the children if applicable, and simply towards day to day costs.
The two main types of life insurance available to UK consumers are:
Level term life insurance
This is the most common form of life insurance, as well as the most cost effective for most people. It is possible to get level term life insurance cover at a very reasonable price, so you won’t have to pay through the nose in order to get the protection that you need. With level term life insurance a lump sum payment is made to your beneficiaries in the event that you die during the term of the cover, which is outlined when you take out the cover.
The term of this type of life insurance cover is generally around fifteen years. If you do not die, and therefore do not claim, during this term the insurance is null and void and there is no cash back facility with this cover. You would then need to look at taking out another policy if you want to continue with this protection. The actual term of your cover will be outlined when you take out the cover, and the premiums will depend on a number of factors such as your health, the term of the cover, and the level of cover.
One of the great things about this type of cover is that you can enjoy protection for a very low price, often just a few pounds each week. The premiums on your policy will not rise, so you won’t have to worry about rising repayments. However, the benefit will also remain the same, so even though inflation may rise considerably between the time that you take out the policy and you die the payout will still be the same as arranged when the policy was taken out.
Whole life insurance
Another type of life insurance available in the UK is known as whole life insurance, and this is where a lump sum payout is guaranteed because the policy will pay out whenever the policyholder dies and not just within a certain term. The cost of this type of cover is higher than level term insurance but for some people this reflects better value for money simply because, as morbid as it sounds, death is inevitable and therefore a payout is guaranteed (subject to terms and conditions of the policy).
There are different variations of whole life insurance cover, and this includes a simple and straightforward variation that simply guarantees a payout and also a variation that has an investment element. You can also opt for a decreasing term plan where bonuses are added to the profits side of the policy in order to decrease the term over which repayments have to be made.
Critical illness cover
With all life insurance policies you can also opt to have critical illness cover added on, and this will cover you for a range of critical illnesses, enabling you to receive a lump sum payout if you are diagnosed with one of the illnesses listed on the policy. You keep the payout even if you then go on to recover from the illness.
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