So Smart’s Guide to (the Many Types of) Life Insurance
Once you have a young family of your own, many of your priorities in life change. Instead of just having the responsibility of looking after yourself, you have the important responsibilities of helping your children through different aspects of their lives, from being tiny babies through to their adult life. You will want to continue protecting your children as they grow up and even after you have gone, you want your children to be well looked after.
This is why life insurance is so important to ensure that your family is financially supported after your death. If you are considering taking out life insurance, it will help to understand the many different types that are available, so that you can choose the option that is most suitable for your family.
The different types of life insurance
With a level term life insurance policy, a fixed amount is paid out in the event of your death and you are able to choose the length of time that the policy is in place for. You might choose to have it until the date that your mortgage is fully paid up so that if you die before the end of the mortgage, your family will receive a sum to pay the mortgage off with.
Whole of Life
This type of policy guarantees a payout when you die, regardless of when it happens. Provided that you continue to make the payments and your death is within the terms of the policy, your family will receive the sum that you arrange as a pay-out.
In this policy cover, the pay-out amount reduces over the term. This will typically be set up to work in line with your mortgage balance as it reduces whilst you pay it off. This type of policy can help to make sure your mortgage and any other debts are paid, without paying more than you need to, as it is shrinking as you pay off your outstanding debts.
Some people take out critical illness cover as well as life insurance, to cover mortgage payments and other debts that they would be unable to pay if they had to stop work due to a serious illness. There is a list of different illnesses and diseases that you can get critical illness cover for and receive a lump-sum payment upon diagnosis of one of the specified critical illnesses.
These are the four main types of life insurance that tend to suit most family’s circumstances but there are many more variations on the market. If you want to make sure that your family can afford expenses like funeral costs, mortgage, other outstanding debts and your children’s education, then taking out life insurance will give you the peace of mind that they will have the finances available for those costs.
Get your free comprehensive quote today from life insurance experts So Smart.