As opposed to whole life insurance that provides life insurance cover until your death, term life insurance runs for a set amount of time, during which you are covered by the life insurance option selected.
The life insurance term that you select will depend on what purpose the life insurance is serving. For example, you may wish to have a life insurance policy in place until your youngest dependent has left home and entered full time employment; until your mortgage is repaid in full; or until you believe you will have built up enough savings elsewhere to fund you and your spouse’s retirement. As a result, the life insurance term that is best for you will depend on an assessment of your personal circumstances.
Term life insurance generally comes in three types: increasing, decreasing, or level life insurance. Increasing life insurance is designed to pay out an increasingly larger benefit upon death as the term progresses. Premiums increase either year on year, or as and when elected by the policy holder, in response to changing life insurance requirements throughout the term. Decreasing life insurance gradually decreases in value over the term of the policy, and are often tied to the policy holder’s mortgage. These policies should be set up so that a payout at any time will be sufficient to cover the outstanding balance of your mortgage, so that your dependents will not be burdened with the expense in the event of your death. Level term life insurance guarantees a set payout if you die during the term; the amount paid out will depend on the amount of cover purchased. If you survive a term life insurance policy, these policies become worthless, and they carry no cash-in value throughout the term; they simply provide peace of mind for the duration of the term.
To speak to an independent life insurance expert regarding the best term life insurance policies for your requirements, complete the form on this page. Totally Money will find you the term life insurance policy to suit your lifestyle at the premium to suit your budget.