Which life insurance policy should I get?

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February 8, 2022

Choosing a life insurance policy can be a bit overwhelming once you start looking at all the different types of life insurance options and varying lengths of cover.

To help you decide what life insurance will best suit you, this jargon-free guide explains how to choose life insurance UK by looking at the different life insurance policy types, what you specifically need or want cover for, and when to get life insurance.

In this guide:

What is a life insurance policy?

Why get life insurance?

What life insurance should I get?

Which life insurance is best?

What is a life insurance policy?

If you die during the term of a life insurance policy, a cash lump sum will be paid out to the policy’s named beneficiary/ies (i.e. the person you want to benefit from the cash lump sum) or to your estate.

Why get life insurance?

So, why do you need life insurance? The main reasons people take out life cover are:

  • to continue providing financial support to their loved ones, from beyond the grave
  • to completely pay off a mortgage on your death so your family don’t lose their home

Read more: The importance of protection insurance

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What life insurance should I get?

What type of life insurance you need will depend on how long you need life cover for and when you take out the insurance.

Cover until your demise

To ensure a policy pays out regardless of what age you are when you die, you would need to take out a whole of life cover (also known as life assurance).

Whilst more expensive than term life cover, this is the only type of policy guaranteed to pay out, even if you live to be over 100-years-old, and so can be a popular choice when you want to make sure you leave a nest egg for any dependants.

A term life policy will only pay out for a fixed term (the number of years you choose to cover when you take out the insurance policy). So if you die after the policy term has ended, you will not receive a payout and will not benefit from the policy.

You may also want to consider a life insurance add-on to a life policy called ‘critical illness cover’.

Cover during your mortgage term

Mortgage repayments are typically your largest outgoing and so you may want to choose a life policy that will cover your mortgage repayments in the event of your untimely death, or for if you’re sadly given a terminal illness prognosis of 12 months or less to live.

There are two main life insurance types for mortgage cover:

  • Decreasing term life where the policy’s payout amount and the cost of your premiums gradually decrease, in accordance with your shrinking mortgage and repayments.
  • Fixed term life where the payout remains the same throughout the policy term, as do your premiums, which, after repayment of your mortgage, would then leave some excess funds for your loved ones.

Read more: Level term vs. decreasing term life insurance

Cover when you’re older

Life insurance cover gets more expensive as you get older, typically over the age of 50, because you are:

  • closer to the end of your life - fit and healthy over 50s wanting comprehensive life cover should shop around and compare deals for whole of life or term life insurance. However, time is of the essence as the older you are and regardless of your health status, the more unaffordable these types of cover become.
  • suffering from health conditions - if you’re over 50 with health conditions or a smoker, you may struggle to get or be able to afford term or whole of life policies. Where this is the case, the only option that may be available to you is specialist over 50s life insurance which anyone over 50 can take out regardless of age or health issues. However, if you live to be a ripe old age the payout could end up being less than the total amount of premiums you’ve paid.

You might like: Do young people need life insurance?

Which life insurance is best?

If you’re still struggling to decide which life insurance is best for me, here’s a round-up of the main pros and cons for the three main types of life insurance cover.

Whole of life cover Term life cover Over 50s cover
Pro Con Pro Con Pro Con
Guaranteed to payout at whatever age you die Payout can be less than premiums you’ve paid Great for paying off debts like a mortgage Worthless if you don’t claim during policy term Cheap premiums regardless of age or health Payout will typically not even cover funeral cost

Looking for a cheap deal on life insurance?

Start comparing quotes now with Bobatoo.

Get a Quote