Which life insurance should I buy?

Which Life Insurance should I buy?

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Choosing the right life insurance policy depends on how much cover you need, how long you need the cover for, and how you want the policy to be paid out. To help you choose here are a few things to bear in mind.

How long do you need the cover for?

Well this depends on the type of policy:

  1. Whole of life insurance are a good option if you need a policy that will provide a pay-out no matter when you die.
  2. Term life insurance policies, on the other hand, will only pay out during the term.
  3. Decreasing term life insurance policies have payments that reduce each month and are a good way of providing cover for mortgage payments. It is also possible to elect to keep payments higher so the money paid out can pay off the mortgage and give a little money to your family too.

Cover for the elderly

Life insurance policies can become more expensive as you get older. This is normally because older people are closer to their life expectancy and may have health issues that have developed during their life.

If you are over 50 what policy should you get?

Well, if you are over 50 and healthy you could go for a fixed term or whole of life insurance policy. Just be aware that with these policies the older you are, the more expensive premiums will become. If you are over 50 and have health issues it may be more economical to go for a specific over 50s life insurance policy which guarantees acceptance. These offer a fixed pay-out based on a set monthly premium.

What kind of policy pay-out do you want?

There are two types of pay-out, depending on the policy you choose: lump sum or an income. A lump sum could help pay off bills like a mortgage, or provide a pot of money to live off for your family. An income could help your family pay monthly bills over a fixed period of time.

You can only get a lump sum with whole of life or over 50s policies, but you can get both options with a term life policy.

So, which pay-out is the best?

It depends on what you want and when exactly you die. If you die just before your policy ends, an income policy will only be paid for the remaining months. But if you die early, your family could be supported for a very long time. A lump sum policy, on the other hand, will leave a predetermined amount regardless of how many premiums are left to pay and may be more attractive if you expect to live for a long period of time.

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So, what are the policy pros and cons?

Here are the main pros and cons for each type of policy out there:

Whole of life insurance

  • Pays out no matter when you die
  • No age limit
  • Doesn’t cover all causes of death
  • Premiums can cost more than eventual pay-out

Term life insurance

  • More pay-out options are generally available
  • Can be tailored around mortgage
  • Doesn’t cover all causes of death
  • Claims can only be made during term

Over 50s life insurance

  • Guaranteed acceptance
  • Low premiums
  • Only available to over 50 years
  • Premiums can cost more than eventual payout