Choosing the right life insurance policy for you

There are a number of considerations when selecting the right life insurance policy for you. Factors include:

How long you require cover for
The final pay out amount
How you would like the final pay out to be paid

Length of cover

There are a number of timescale options to choose from

Cover for the life of your mortgage

A decreasing term life insurance policy is a renewable term policy with the coverage amount decreasing at a predetermined rate. This reduction can occur on a monthly or yearly basis.

This type of insurance cover also allows you choose if you’d prefer to keep the payout amount the same throughout the term ensuring your mortgage is paid off in the event of your death and money is left for your chosen recipients.

Lifetime cover until your death

A whole of life insurance policy will payout regardless of your age when you die. It’s designed to last as long as you do and requires you to pay a monthly premium so that the policy pays out to your chosen recipients when you pass.

An alternative option is a term life insurance policy which provides cover at a fixed rate of payments for limited period of time. If you die outside of the term then there will be no payment to your beneficiaries.

Finding cover when you are older

Life insurance policies can increase in price as you get older. This is because you are getting closer to your life expectancy age and you are likely to have some health issues.

However there are options:

If you are over 50 and have suffered from health problems you can get accepted for term of whole of life insurance but, as you would expect the premiums are often very expensive. A specific over 50s life insurance policy will guarantee acceptance and offers a fixed payout based on the monthly premium payments you can afford to make.
If you are over 50, fit and healthy then you could get a term or whole life insurance policy. It’s worth noting though that the longer you wait to apply the higher your monthly premiums will be.

Selecting your pay out

Dependant on the policy you select, there are two types of pay outs available.

A lump sum: This type of payout is often used to pay off a mortgage or provide loved ones with money to support them after your death

An income: Some people choose this type of payout option as a way of helping loved ones with monthly bills and commitments. However, the payments will stop at the end of the terms policy.This type of payout is only usually available with term life insurance policies.

How do I select the right payout?

Should you die a matter of months before the end of your policy then an income payout will only be paid for the remaining month. However, if you choose a lump sum the entire amount will be paid to beneficiaries.
If you die early on during the policy, an income payout will provide money for loved ones on a monthly basis for the remaining years. However, if a lump sum is chosen then your recipient will receive the entire payout in one payment, which could offer them more in return for your premiums paid.

Policy lowdown

Want to know more? Here is a brief synopsis of some of the pros and cons of each policy type.

Whole of life insurance

Guaranteed payout whenever you die
No age limit placed on claims
Some causes of death are not covered
Premiums can exceed payout

Term life insurance

Various payout options are available
Great option for fitting around your mortgage
Some causes of death are not covered
Beneficiaries can only claim during the term

Over 50s life insurance

Acceptance guaranteed regardless of health history
Low premium options available
Only available for over 50 years
It’s possible for premiums to exceed payouts

Want advice from a life insurance adviser? Get a quote here.