insurance protects your family against debt when you are gone. Since there
are so many levels of life insurance with different kinds of cover, be
sure to go over you options carefully, select what is right for you and
your family. It is also important to know that you can change your policy
at any time if your life circumstances change.
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Here are some of the
different types of life cover available in the UK:
1. Level Life Insurance is the most uncomplicated method to give your
family financial help. Level life ensures a certain amount of cover that
stays the same throughout the life of the plan. If you die, your family
receives that guaranteed amount in a lump sum. The level of the cover you
require and how long you want the cover to last is related to your
personal situation. The level of cover you purchase determines the cost.
Note that level life insurance has no cash-in value if you should choose
to stop the cover.
2. Decreasing Life Insurance is meant to cover loans like your mortgage
and other large loan payments that decrease over time. Since the amount
you owe on the loan or mortgage reduces over time, so does the premium on
your decreasing life insurance policy. Decreasing life plans are generally
lower cost than other styles of life insurance. If you die during the term
of the insurance, it pays out a lump sum to your family but never offers
any cash value.
3. A whole life insurance plan provides your family with a guaranteed
amount of money upon your death. The difference between this and level
life is that you can choose to have your cover increase by 5% every year
to help guard against rising costs in the economy.
4. Guaranteed whole life provides cover for the rest of your life and not
just for a predetermined fixed term as in the other types of insurance
described. A cash sum is paid to beneficiaries when you die. You can
choose the amount of coverage and also opt for the 5% yearly increase.
These plans can also be put in a trust so that your family does not have
to pay inheritance taxes.
5) Term life insurance runs for a fixed term,
and pays out if the policy holder dies with that term. Term Life Insurance
is generally regarded as more expensive than Decreasing Life Insurance
when used to cover items such as mortgages.