Types of life insurance

A life insurance policy can give you peace of mind that your family will be financially secure if you die. There are different types of life insurance policies available, and you may prefer one policy over another depending on your needs.

Let’s look at what the different types of life insurance policies are, and what to expect with each. 

  • Life insurance policies come with different terms and features. This can be confusing if it’s your first time looking into life insurance. We’ve broken down the different types of life cover for you to consider:

    Term life insurance

    With this kind of life insurance, your cover lasts for a fixed amount of time. For example, 5 years, 10 years or 30 years. Your premiums stay the same for the full term, but the amount of cover can vary depending on which type of term you choose:

    • With decreasing term life insurance, the amount of cover reduces over time.
    • Increasing term insurance gives you a potential payout that goes up over time.
    • Level-term life insurance gives the same amount of cover for the full duration.

    Whole of life insurance

    This type of policy covers you for your entire life, giving a payout to any claimants upon your death – whenever that may happen. Because of this, it tends to be one of the more expensive life insurance options available.

    Mortgage cover

    You could opt for decreasing life insurance or level-term insurance. This can contribute to covering future mortgage repayments in case you pass away.

    Over 50s life insurance

    Even over the age of 50, you might want to support your loved ones financially in your absence. Or, you may simply want to leave something behind for when you’re not there.

    It’s important to note that some insurers may have an age limit when it comes to life cover. While we don't offer specific life insurance for over 50s, you can still apply for a life insurance policy up to the age of 59. Policy holders can get cover up to the age of 69.

    Our life insurance is provided by Scottish Widows - who are also part of Lloyds Banking Group. They are our life insurance experts, helping to protect what matters most for over 200 years.

  • With three types of term life insurance to choose from, there’s lots to consider:

    Level-term life insurance

    With this type of policy, the payout to the holder’s beneficiaries will remain the same during the full term of the policy. So, you’ll know exactly the amount of payout that your loved ones will receive if a successful claim is made. Level-term cover can be helpful for people who want to keep the same amount of cover over time.

    Decreasing term life insurance

    In this kind of cover, the payout will gradually decrease with time. This especially gears towards financial commitments, such as a mortgage repayment or servicing loans and debts, which could decrease over time. It should be reassuring to you and your loved ones to know they’d be taken care of if you were to die unexpectedly. With decreasing term life insurance, your premiums stay the same throughout.

    Increasing term life insurance

    Increasing term life insurance considers inflation, so the payout amount could increase during the cover term. For example, if you have financial commitments that could be affected by an increase in interest rates, this policy will take that into account. This makes sure that your loved ones aren’t financially burdened and can maintain their standard of living in your absence.

  • A whole life policy runs for the full duration of your life until your death, whenever that may be. Your loved ones can then make a claim if you’ve kept up with your premium payments.

    This is in contrast with term life insurance, which only covers you for a set period, defined at the start of your policy. For example, you might want to get term life insurance if you are paying your mortgage.

    Whole of life insurance could be suitable if you want to make sure that your family is financially safe if you die. Because it gives long-term protection, whole of life insurance can be one of the most expensive forms of cover. But as with all forms of life insurance, the younger you are when you get the policy, the cheaper your premiums could be.

    It’s important to go over the terms and conditions of each policy carefully before committing to one of them.

  • This type of life insurance policy is suitable for people aged 50 and over, whose needs and concerns might be different compared to younger adults. For example, you may want to make sure your partner maintains the same lifestyle in case you pass away unexpectedly. Or you may simply want to make sure that your grandchildren are financially safe when you’re no longer there.

    The premiums of an over 50 life insurance policy may be more expensive than other life insurance options. This is because lenders may see an increase in risk. Nevertheless, the financial reassurance that a life cover policy can offer stays the same, whatever age you are.

    There is usually an upper age limit to qualify for an over 50s life insurance cover, often between the age of 50 and 80. As with any financial commitment, make sure to check the policy terms and conditions carefully.

    We don’t currently offer a specific policy for people aged 50 and over. We do offer life insurance for people under the age of 60 and can give cover until they are 69 years old.

  • Depending on you and your partner’s current situation, you may want to consider a single or joint life insurance policy.

    A single life insurance policy covers just one person. In the event of their death, a payout will be made to the policy holder’s beneficiaries, after a valid claim.

    By contrast, joint life insurance is tailored for couples, both partners and spouses. It could also be used by business partners. If a claim is made following the death of one or both policy holders, the insurer will pay out once.

    In both cases, a payout could be made to relieve beneficiaries from financial pressures in your absence.

  • There are other common types of insurance you might want to consider. These include:

    Critical illness cover

    Critical illness insurance could relieve you of the financial pressure that comes with a critical illness diagnosis, or life-changing surgery. Unlike life insurance that makes a payout to your beneficiaries in the event of death critical illness cover works differently. Your insurer may make a payout to you, which could help to support your family while you focus on your health.

    Keep in mind, however, that not all illnesses may be covered. So, it’s important to check your policy carefully. The severity of illness may also affect the policy, so be sure to check the terms and conditions.

    Learn more about critical illness cover. 

    Terminal illness cover

    Terminal illness cover can sometimes be available as an add-on to life insurance, or may even be included as part of your existing life insurance policy. This form of cover could give a payout to your loved ones if you’re diagnosed with a terminal illness. In this case, the payout may go towards helping your loved ones navigate treatment, or to help put your affairs in order.

    A payout is usually made with this type of cover after there’s confirmation that the illness will lead to death within a given period, such as one or two years. If a payout is made but you still survive past the expected date of death, the money won’t have to be paid back.

    Even though we don't offer this type of insurance, it might still be a consideration if you’re concerned about getting a terminal illness and have financial responsibilities you don’t want to burden your loved ones with.

  • The type of life insurance cover you select depends on your current situation and needs. A life insurance policy could afford you peace of mind, especially if you have a growing family and multiple financial commitments.

    When choosing life cover, consider your:

    • Age – the younger you are, the cheaper your premiums might be.
    • Health – your health plays an important role in how much the policy will cost.
    • Budget – what’s the budget you’re willing to pay for the cover you want?
    • Payout – how much would you like your loved ones to receive in the event that you pass away unexpectedly?
    • Options – Are you looking for just one life policy or do you want to add more life insurance policies alongside it? For example, you may be interested in critical illness cover.

    Remember that life insurance has no cash in value at any time. If no claim is made during the term, the policy will end and you’ll get nothing back. If you don’t pay your premiums on time, the policy will end and you’ll get nothing back.

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