Different Types of Life Insurance
There are lots of different types of Life Insurance policies, as a Mortgage Broker in Hull, here are the most popular policies that we see people take out:
Level Term Life Insurance
With Level Term Life Insurance, you will still get a payout, however, you will only be covered for a fixed ‘term’. This policy only pays out if you die within your policies term. They usually run between 5-25 year terms in 5-year increments.
Term Life Insurance is often used to cover a mortgage. People usually take out this policy that’s in line with their mortgage term. Therefore, if you were to die and still have your mortgage to pay off, the policy will pay out the This means that the mortgage payments will not fall to family members or any other name attached to the mortgage.
Decreasing Term Life Insurance
As a Mortgage Broker in Hull, we’ve found that this type of Life Insurance policy is the most popular.
You may be asking “why would you want to take out a policy that decreases in value?”. Well, this policy is targeted at homeowners with repayment mortgages – which is the majority of people. This policy is usually taken out to pay off the outstanding mortgage balance should you die.
The policy’s value mirrors the outstanding balance remaining on your mortgage. As the amount owed on your mortgage decreases, so does the sum insured.
Decreasing Life Insurance is typically taken out alongside other Insurance products depending on personal circumstances. This is why we always recommend speaking to a Mortgage & Protection Specialist in Hull, we can help recommend the most suitable insurance for your needs.
Increasing Term Life Insurance
This type of Life Insurance policy will still payout if you die within your fixed term. It works in the opposite way to Decreasing Term Life Policy.
The difference with Increasing Term Life Insurance is that the amount that you are covered for increases as your term goes on. It will increase by a fixed amount until your policy term ends.
This type of Life Insurance was introduced to protect the policy’s total value against inflation and is usually in line with the retail price index.
Whole of Life Insurance
As a Mortgage Broker in Hull, we’ve learnt that the Whole of Life Insurance policy is not at the forefront of the insurance market, however, it is still helpful and it may be the policy that suits you most.
The Whole of Life policy is exactly how it sounds, the cover lasts your whole life. When you die, the policy that you took will payout. The costs that come with Whole of Life Insurance will be a little more than a Level Term Life Insurance, however, you are covered for your whole life and not just a fixed term.
Assuming that you’ve kept up-to-date with your life insurance payments, your cover will apply for your whole life. This type of insurance is usually used for family protection and part of inheritance tax planning.
Joint Life Insurance
If you are in a relationship/married, you could consider taking out a Joint Life Insurance policy that will payout in the event of one of you dying. You could still have two separate Life Insurance policies if you really want to, however, having a Joint Life Insurance policy is often cheaper than taking out two different ones.
The way this policy works is that if one person dies, the policy pays out, and then ends. This may seem like a downside to the policy, but if you originally took out the policy to pay off your mortgage, you would still be able to do so as the money will be released after the death of one of the policyholders.
Death in Service
This type of Life Insurance cover may be offered to you by your place of employment. Your company is not obligated to provide Death in Service cover, however, some do as part of their employee benefits package.
Death in Service is usually a lump sum of cash paid out to an employee’s family or a person of their choice if they die. This sum can be up to 5 times their annual salary. There are no specific limitations on what can be done with the employee’s money.
The payout has nothing to do with if an employee dies in the workplace.
Taking out Life Insurance as a Single Homeowner
Just because you are a single homeowner, doesn’t mean that you should disregard all Life Insurance options.
If you have settled into a new place and are currently living on your own without children or a partner, it’s not unusual for people to forget about life insurance. People also sometimes choose to ignore it and this is because it doesn’t always apply to single homeowners.
What you should think about though, is that your circumstances could change in the future, and if they do, then Life Insurance could become an essential thing to have.
Speak to one of our Mortgage Protection and Insurance Specialist in Hull and find out whether taking out Life Insurance as a single homeowner could be beneficial for you.
Our Insurance Advice Service in Hull
We want to make sure that you have the right policies in place to allow you to leave your family in the best position possible if you die. Taking Life Insurance will give your family financial certainty and will take a little stress off them in an already difficult time.
As a Mortgage Broker in Hull, we know that Life Insurance, no matter the type of cover, is extremely beneficial and can put you at ease knowing that your family won’t have to pay for any of your debt or payments.
If you want to find out more about Life Insurance, take up our free Insurance consultation in Hull. We will explain the policies available to you and why they could benefit your and your family’s personal and financial situation in the future.
As a Mortgage Broker in Hull, we’ve found that Life Insurance is typically taken out in conjunction with other policies, depending on your personal situation. Find out about other Insurance options here:
– Mortgage Protection Insurance Explained
– Income Protection Insurance Advice in Hull
– Critical Illness Insurance Advice