Term life insurance can often offer the best value for those looking for cheap life insurance. Put simply, term insurance does what it says on the tin: it insures you for the term of the policy, paying out if you die before the policy ends. If you don’t die and the policy ends, the premiums you’ve paid will not be returned.
There are two main types of term insurance: level-term life insurance policies and decreasing-term life insurance policies.
Level term vs decreasing term life insurance
Level term life insurance
A level-term life insurance policy pays out the same pre-specified lump sum if you die, regardless of whether you die at the beginning, middle or end of the term. The cover remains the same throughout the life of the policy and the monthly or annual premiums usually remain the same too. This type of policy can be the best solution if you are looking to cover interest-only mortgages that are not covered by an investment vehicle or endowment policy.
In the UK, comparison websites often use level term life insurance as the basis for producing life insurance quotes, but it’s not always the best route to keeping costs down (see below on why decreasing term life insurance can be cheaper).
What does Decreasing term life insurance mean
With a decreasing term life insurance policy, the amount of cover decreases over time, although the premiums are usually fixed and remain the same for the duration of the policy.
This type of life insurance is often used to cover the debt that will reduce over time, for example, a repayment mortgage where the outstanding balance will gradually get smaller.
If you are looking for cheap life insurance then, provided you understand that your cover will decrease over time, decreasing term life insurance can be a good idea as it is often significantly less expensive that level-term cover. As well as mortgage cover, this type of policy is also useful for inheritance tax planning purposes.
Life insurance with other benefits
Vitality provides term and whole of life cover in a similar way to other providers, and the insurance behaves as described above, but it offers savings and rewards for people who keep healthy through their Wellness Optimiser. With it, you can get up to 60% upfront discount on Whole of Life insurance or earn up to £125 cashback every year.
Vitality believes it is their responsibility to help you lead a healthier life, which in turn it hopes will lead to fewer claims. It does so by providing additional benefits such as discounted gym membership or cashback rewards if you stay active.
Before you purchase a policy, however, always make sure the underlying life insurance policy is still fit for your needs.
How much does term life insurance cost?
We got quotes in October 2018 for a level term policy for a 35-year-old, non-smoker with a clean medical history and based in London. But as with any type of insurance, costs vary widely and it makes sense to read as many life insurance reviews as possible and before you sign on the dotted line, make sure you have gathered multiple quotes.
In general, though, life insurance costs start rising with age, the size of the policy, medical complications or lifestyle factors such as smoking.
Life insurance online quotes are a quick and easy way to compare costs and benefits across multiple providers, but always make sure you are comparing like with like.
Life insurance comparison websites can be a good place to look too, but remember that the information they show to compare life insurance companies is relatively basic so do your own life insurance research too.
For more information, please contact me. I will be happy to help with whatever questions you have. www.rgwealthsolutions.com +6011-51565649
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