Life Insurance

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Different types of Life Insurance Structures

Level

Choose a lump sum to leave behind for your loved ones, and select how long you want your cover to run for. You’ll then pay the same amount each month until your policy ends. This lump sum can help to maintain the living standards of loved ones. It could be used to pay off an interest-only mortgage, or go towards general living costs and monthly outgoings, such as rent.

Level of cover remains the same

Premium remains the same

Start

Term of cover

End

Decreasing

You might choose this type of cover to help your loved ones pay off a repayment mortgage or long-term loan if you pass away at any time during the policy term.  The cover lasts for a specific length of time, and your monthly premiums are fixed, unless you make any changes to your policy  The value of what you’re paying off gradually decreases over time, and so does the cover. That’s why it usually costs less than level cover

Level of cover decreases over the term

Premium remains the same

Start

Term of cover

End

Increasing

You can choose to make your cover amount increase in line with inflation. This means that your monthly payments may rise, and ensures that the lump sum won't be worth less in the future because of the rise in the cost of living. If you choose this option, the maximum annual increase would be 15% to your premium and 10% to your cover

Level of cover increases over the term

Premium increase over the term

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Term of cover

End

* Please note these graphs are for illustrative purposes only and percentages will vary depending on policy structure

Some Guidance

Do you need life insurance?

Ask yourself if you were no longer here,  how much money your loved ones might need to maintain their living standards. This may be costs such as bills, school fees, mortgage repayments and any other debts you might have that need to be paid.

Joint or separate life policy?

If you and your partner would like combined cover, you can take out a joint policy. This pays out once and won’t provide cover for the second person after the first passes away. You can also both take out two separate policies. So once the insurer pays out for one person their policy will end – but the second person’s policy will continue.

What is term life insurance?

Term life insurance covers you for a specified amount of time – or the term of the policy. You can choose the length of time you want, whether it be 1 year or 50 years. Often, people think about when their dependants may start earning their own income or the number of years left on a mortgage.

There are three different types of term life insurance: decreasing cover, level cover, and increasing cover. 

How long do I need cover for?

When it comes to how long you need cover for, think about how long your kids will need financial support, or when your other half might retire.

What is Whole Of Life Cover

Whole-of-life insurance is a type of life insurance that will pay out when you die, no matter what your age is, also known as whole-of-life assurance, is life insurance that covers you for the entirety of your life, rather than for a set term of say 30 years. It means your family will receive a payout however long you live, as long as you keep paying the premiums.

Life insurance helps give your family financial protection should you pass away within the policy term. It lets you leave a lump sum behind – helping your loved ones maintain their living standards or pay mortgage costs. It’s up to you how much cover you want.