The reason it is wise to seek advice when purchasing life insurance is that there are a few different types of cover that a person can choose and one might better suit your circumstances than another. We will now cover those different types of life insurance briefly to help you make a decision.

Level Vs Decreasing Cover

Depending on the reasons for your life insurance policy, you will either have to choose level term cover or decreasing cover. What do each of these mean?

  • Level cover – life insurance that is of level cover type will pay out a fixed amount (which you will decide and agree on when you buy the policy) and lasts for a fixed number of years. If you reach the end of this term and wish to continue your protection then you will be required to buy a new policy.
  • Decreasing cover – if you would like financial cover that offers a payout which falls over time then this type of policy is for you. You may wonder why you would want cover that gets lower through the years but they are often used to protect family members with regards to mortgage payments so as the amount you owe on your mortgage falls, so do your premiums.

Term Vs Whole Of Life

Different people buy life insurance for different reasons and because of this the life insurance companies offer two varying length of policy. Here are some simple explanations of both.

  • Term life insurance – this policy will only last a fixed number of years. You may be wanting to cover your future mortgage payments which last 20 years say, or you might decide to buy life insurance while your children are growing up. These circumstances are just two where a term life insurance policy might be more suitable.
  • Whole of life insurance – such a policy will cover you for your entire life and will payout when you eventually do pass away. This type of insurance is often called life assurance as death is assured and you will be covered whenever this does happen. This is right for those who are looking to cover funeral expenses and to give their loved ones a nestegg when they have gone.

So those are the basic types of life insurance, but remember that discussing your needs with an advisor is still the best way to ensure you get the right insurance.

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