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What Are The Different Types Of Life Insurance Policies In The UK?

April 19, 2016

There are different types of life insurance policies offered by providers in the UK. Depending on your age, mortgaged property, health and income, you can select a life insurance plan. Make sure that you search enough to get the best plan available.

Following types of life insurance are available in the UK:

Whole of life cover: As the name suggests this type of life insurance cover is for your entire life. It inevitably pay-outs a lump sum money in case of your death. As it insures your entire life the premiums are quite high compared to other types of insurances. You will have to pay the premiums till your death.

Level term insurance: This type of insurance provides your dependents with a pre-decided amount in the event of your death within a specified time such as 5, 10, 20 years. You will not get an extended cover beyond a pre-specified time period. The premiums will be much lower than the whole life insurance and so this might seem an affordable solution. As an example, you can get insurance until your children finish their education so that the family does not face any financial crisis in case you die accidentally.

Decreasing term insurance: A unique type of life insurance, decreasing term insurance is also known as mortgage life insurance. In this case, the payout will decrease with each passing year to essentially track the mortgage obligations. The insurers consider that the mortgage debt will reduce as more of it is paid off. As you might expect, decreasing term insurance is cheaper then level term insurance as the end pay out decreases with time.

Increasing term insurance: If you plan to have your future payout rate increase with every passing year, then you can choose an increasing term insurance. By choosing an index linked policy, you can actually link your payout proportionate to the rate of inflation. You can arrange payout rates to rise by a fixed percentage per year too. Naturally, the premiums for this type of cover would be much higher than level term or decreasing term insurance.

Renewable term insurance: This kind of insurance is for a fixed period of time. However, this period can be extended without the need of any medical check-ups. The premium amount would increase as per your age. If you have contracted any disease during the period of the old policy then it won’t be considered in the extended period.

Joint life insurance: This one is especially for couples or partners that are financially connected. Instead of paying premiums for two separate policies, you can have insurance for both partners and still pay for one policy. This way, both individuals are insured at one cost. In case of the death of one person, the insured amount is paid-out and the other person has to buy a new cover. This policy can be considered to be more suitable for young aged couples who cannot pay two premiums with a potential limited income.

Death in service benefits: This type of insurance is provided by employers to support the family of their employee. In the event of the death of the employee the dependants will get a lump sum amount of money. It is paid even if the death does not take place in the workplace or during the work hours or related to the job done. If your company provides this insurance, then you may not need a separate life insurance cover. However, the cover will end as soon as you leave the company or retire.

The above mentioned are various types of life insurance covers offered by providers in the UK. You can select the one that suits you the most by using FreePriceCompare.com’s comparison services.

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