Guide To The Main Types Of Life Insurance

When it comes to any type of insurance, we all know that there is no one size fits all option. Just because your sibling got a fantastic rate from a health insurance provider, for example, there’s no guarantee that you will be looking at anywhere near the same number. But we put ourselves through the headache of finding the best policies and making sure that every single piece of information is correct because we all know how important it is to make sure that we and our families are covered in the event of disaster.

Life insurance can be one of the more complex policies to get exactly right, but it is arguably the most important that you will ever take out. So many people choose to skip life insurance policies or avoid them altogether, either because they’d rather not think about it or because they think it’s not something that they need to think about just yet. But we have all seen the importance of having a plan in place over the course of the pandemic. Having a good life insurance policy will help you to rest easy in the knowledge that you have secured your family’s future after you’re gone.

If you are finding it hard to get your head around the different kinds of life insurance policies available, here are some of the main types that you should be thinking about.

Term Life Assurance

When people talk about life insurance policies without getting into specifics, this is probably what they are referring to. With this policy, you can choose the period of time during which you want to be covered and the amount that you want to be insured for. Now, if you die within that term then the amount is paid by the provider to the named beneficiaries, but if you don’t, then the policy provider will pay nothing, and they will also hold onto the premiums that you have already paid.

There are three main types of term life assurance that are generally offered. An increasing term policy means that the provider will pay out more as the policy goes on (this will help to account for inflation, and more importantly it will help to provide for young children). A decreasing term policy does the opposite and is usually taken out by people who are paying off other debts and loans, such as a mortgage. A level term life cover policy is a flat rate that will pay off the same amount no matter when, and as such does not take inflation into account.

Business Life Insurance

So many businesses out there do not have a plan in place for what happens in the event of a shareholder or owner becoming critically ill or passing away suddenly. Without the necessary funds to buy back the deceased’s shares, the company can find themselves looking at unwelcome new investors or losing control of the business entirely.

If you own your own business, then it may well be worth thinking about taking out business protection insurance. There are three main types of business protection insurance: keyman insurance, relevant life insurance, and shareholder protection insurance.

Shareholder and keyman protection insurance protect your business in case a shareholder or vital team member gets sick. There is also Relevant Life Insurance, which pays out a tax-free lump sum to the beneficiaries, making this a tax efficient life insurance for the benefit of a company director’s loved ones.

This is an excellent option for small business owners or employees who are either not eligible for a group life cover plan or who are high earners who already have a lot of funds tied up in their pension. If you want to learn more about Shareholder Protection Insurance and Relevant Life Insurance and see if you might be eligible, visit drewberryinsurance.co.uk.

Whole Of Life Insurance

Whole Of life insurance is, as the name suggests, a policy that starts as soon as both parties sign off on it and will continue until your death. This is a solid choice for anyone who just wants to get a policy set up and not worry about it afterwards. You know that the pay-out will be the same no matter when you pass away, whether it’s decades after you secured the policy or soon after. The main drawback is that this policy can be significantly more expensive than a term policy. However, there are some policies that may be a little cheaper depending on your age.

Joint Life Insurance

This is a common choice for partners, as the policy will cover the two of you and will pay out if one or both of you dies. It allows you to know that your children and your partner will be looked after in the event of your death, but it should be noted that the surviving partner will need to take out a new insurance policy once this has paid out. We have all faced financial hardships over the course of the last year, and it will make a tremendous difference to the ones you leave behind if you have taken out proper life insurance.