Types of UK life insurance

There are several different types of life insurance policy.

• Term insurance (also known as level term insurance or fixed term insurance)
  
  This type of policy pays out if you die within a given time.
  
  If you survive to the end of the policy's term, no benefit will be paid.
  
  How long the term is for depends on your needs. For example, it might be until you have paid off your mortgage or until your children have left full-time education.
  
  The sum that will be paid out is guaranteed and will be the same whenever the policy pays out.
  
  
• Decreasing term life insurance (also known as mortgage life cover)
  
  This is cheaper than term insurance as the benefit payable on death falls each year until it is zero by the end of the policy's term.
  
  It is commonly used to protect mortgage repayments as the more repayments you have made before you die, the less will be left for the policy to pay off.
  
  
  
• Renewable term insurance
  
  This is similar to term insurance but on the expiry date there is an option to continue the policy without a health review.
  
  
  
• Whole-of-life
  
  With this type of policy the insurer guarantees to pay the sum assured on the death of the person, whenever it occurs. This is more expensive than term insurance.
  
  
  
• Convertible term insurance:
  
  This is level term insurance with the option to revert to a whole-of-life policy or endowment policy when the original term comes to an end.
  
  
  
• Increasing term insurance
  
  Due to inflation the value of money declines each year. Consequently, this form of insurance combats that with an escalating sum assured.
  
  
  

Read On

What is life insurance?

Who needs Life Insurance?

Who provides life insurance?

Types of life insurance

How much does life insurance cost?

Tips / Do's and don'ts for getting life insurance

Summary of Level Term Insurance Policies



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