Life Insurance cover 

Life insurance pays out either a lump sum or regular payments on your death, giving your dependants financial support after you’ve gone.

The amount of money paid out depends on the level of cover you buy.

You decide how it’s paid out and whether it will cover specific payments – such as mortgage or rent – or if it’s to leave your family with an inheritance.

What types of life insurance are there?

There are two main types:

Term life insurance policies

These run for a fixed period of time, known as the ‘term’ of your policy, such as five, ten or 25 years. They only pay out if you die during the policy.

There are three kinds of term life policies.

1. Level – pays as a lump sum if you die within the agreed term. The level of cover stays the same throughout. This is the most simple and affordable option.

2. Decreasing – the level of cover reduces each year. It’s designed to be used with repayment mortgages, where the outstanding loan decreases over time.

3. Increasing – the level of cover rises over the term of the policy, to keep up with inflation.

Whole of life insurance policies

These pay out no matter when you die, as long as you keep up with your premium payments.

They’re often used to help towards a funeral or for Inheritance Tax planning.

However, they’re typically more expensive than shorter-term policies. There’s also a possibility that if you live longer than you expected, you could end up paying more in than you’ll get out.