What life insurance should I get?

Whether you have just taken out a mortgage, or you want your dependencies to be covered for whatever eventuality life throws your way, there are a number of reasons that you will be wondering ‘what life insurance should I get?’. In this blog, Hilltop Finance uncovers the different types of life insurance available, so you have more of an understanding of which could be the right option for you. 

What is life insurance?

In a nutshell, life insurance is where you pay a set amount (called a premium), usually monthly, for the duration of an agreed policy term, with the expectation of your family or loved ones receiving a pay-out when you pass away. Your recipients will then be free to use the funds on whatever they like, whether that’s paying bills, your funeral expenses, a mortgage, or putting a child through education. Having life insurance as a safety net can help your family stay in their home and pay for the things you planned for. If anything, life insurance is for your loved ones. 

The amount of coverage you’ll receive and the premiums you’ll have to pay will be entirely determined by your circumstances, medical history, lifestyle and the type of policy you purchase. 

How life insurance works

There are three main types of life insurance; term assurance policies, whole of life policies and family income benefit policies. Each type of life insurance has certain characteristics that may be more suitable to you, and your family, depending on your current situation.

1. Term Assurance Policies – The most basic sort of life insurance is term life insurance. It allows you to define how much coverage you want and how long you want to be covered for – the insurance will pay out if you die within that time frame, but if you don’t, the policy will stop and you won’t get your premiums back. Within term assurance life insurance, there are three different types of policy; a level term, an increasing term and a decreasing term. A level term pays out a lump sum in the event of your death, with the amount you’re covered for remaining the same throughout the term. An increasing term increases the amount of cover over the term, and a decreasing term decreases the amount of cover over the term.
2. Whole Of Life Policies – Whole of life insurance policies are exactly what they sound like: they protect you for the rest of your life and pay you when you die, no matter when that may be. Whole of life policies are more expensive than term assurance policies, mainly because of the guaranteed payout.
3. Family Income Benefit Policies – This is a form of decreasing term life insurance that gives your beneficiaries a regular monthly income instead of a single bulk payout should you die before the policy’s expiration date. This certain type of life insurance would be particularly suitable should your beneficiaries be in need of monthly financial support for such things as repayment mortgages.
4. Single or Joint Life Policies – In addition to the above broader categories of life insurance, you can also choose to take up a single or joint life policy. This is something that must be carefully considered should you be living by yourself or as a couple. Single life insurance policies as you would expect, only cover one person, with any proceeds going to the beneficiary’s nominated recipients. Joint plans, on the other hand, cover both partners and payout either on the first partner’s death (first-death policies, which are generally used to cover the mortgage and financially support the second partner) or the second partner’s death (second-death policies, which can be used to financially support beneficiaries of both parties, generally to cover an inheritance tax bill).

What is the best life insurance?

With life insurance, there is no ‘one size fits all’ and what might be the best life insurance for you may not suit your family or friends. This is why it is particularly important to do your research and speak with independent advisers or brokers to help find the best policy for you.

Life insurance advice 

If you are looking for life insurance advice, the team of advisers at Hilltop Finance are here to help. If you would like a free non-obligation life insurance quote simply call or fill out a quote request form and one of our team will get back to you to discuss your range of options.