Term Assurance & Whole of Life Cover
Term assurance is generally the cheapest - and simplest - form of life assurance. You insure yourself for a set term, for example until a loan is paid off or you reach a certain age. Whole of Life Cover does exactly what it says on the tin: you can be covered until you die but these policies will cost a bit more.
These policies do not contain any investment element - they simply promise to pay out if you die within the term. If you don't die within that time, you do not receive anything.
Term policies can either be level or decreasing. A level policy simply means the sum assured remains 'level throughout the term of the policy. If you die on the first day of the policy, you get exactly the same sum as you would if you died near the end of the policy. A decreasing term assurance policy on the other hand, will pay out more at the beginning of the policy than it would at the end.
The way a term policy pays out can also come in one of two ways. Those that pay out a lump sum on death and those that pay an income to the end of the term, known as family income benefit policies. As usual there are pros and cons to both, a lump-sum policy can be more flexible because it allows your family to have a mixture of lump sum and income upon your death, but the income may be dependent upon investment returns at the time of death. A family income policy on the other hand is often cheaper because the liability is always decreasing for the insurer, for example, if you die in the 18th year of a 20-year policy, the insurers would only have to pay income for two years. It's also easier to work out the level of cover with this type of policy because you simply work out the income you would need to replace.
Over 50s Plans
If you are a UK resident aged 50 to 80, you could also consider an over 50s plan. These are often taken out by people as small policies to protect their families from the extra burden of having to cover various costs such as a funeral at such a distressing time.
These plans are are designed to be simple and quick to set up to give you peace of mind that a basic level of life cover is in place. For those people over 50 in relatively good health or those requiring larger levels of cover it is also worth considering standard 'Term Assurance' or 'Whole of Life' policies. These do require some medical information but can offer a better level of cover if medical criteria are acceptable to the insurance company.
Impaired lives can be referred to specialist providers who look to cover those who have been declined by other providers.
Protection Products... pure and simple
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