Your life insurance options
It’s all too tempting to put off important decisions, but when the security of your loved ones is at stake, we think it’s best to act now, before it’s too late. With a range of life insurance products on offer, the choice can be a daunting one, which is why we’ve put together this simple guide to explain exactly what you can expect from each.
Whole of life cover
The clue to this one is in the name. Whilst some life insurance policies will only pay out if you die before a certain date, whole of life cover provides your family with the financial protection they need whenever you pass away. This particular product is advisable if you are purchasing life cover along with a mortgage, as your family will receive a one-off payment at any point during the mortgage’s term, even if it’s 25 years down the line.
The slight downside to this policy is the additional cost, although the premiums will stay the same throughout the policy’s duration unless the company has a review clause.
Term life insurance
Term life insurance provides cover over a predetermined timeframe and will pay out a lump sum to your family if you die within that term. People often choose to be covered for the duration of a mortgage or while they have dependents at home or in full-time education. Due to the limited timeframe, term life insurance is less expensive than whole of life cover.
Joint life insurance
This is a single policy open to couples, which will pay out if either you or your partner dies. As a single policy, joint life insurance will only pay out once, after which point the cover will cease. A joint policy is less expensive than two separate plans; however, separate policies continue to provide cover even after the first policy has paid out.
Death in service
Death in service cover is provided by some employers and will pay out a lump sum if you die while in employment with that company. It is a common misconception that this type of insurance only provides cover if you die during the course of your work or on work premises, but this is not the case.
If you have this type of cover in place then don’t assume it’ll be enough to provide for your family for the long term. Typically, death in service cover will amount to three or years’ salary, so for peace of mind you may wish to take out a life insurance policy as well.
Dual Life insurance
This is a dual life policy open to couples, which will pay out if either you or your partner dies. If both partners were to die together a payment would be made for each partner. Unlike a single policy, joint life insurance which will only pay out once ,a dual life policy could potentially pay out twice. A Dual policy is slightly more expensive than a joint life policy; however, dual life policies continue to provide cover even after the first life has died and paid out.