Post Office Life Insurance
Choose between level, decreasing or increasing term insurance, each designed to offer you peace of mind based on your circumstances.
It’s worth mentioning that both life insurance and life assurance share the same persuasive advantage: providing for your loved ones when you’re gone, and the peace of mind that brings.
Much will depend on your stage of life and what you intend the insurance payout to cover should you die. For a young, healthy person, term life insurance is a consideration when buying a house or starting a family.
Decreasing cover is a form of term life insurance that is designed to cover the remaining balance on a reducing debt such as a repayment mortgage. It is designed to expire at the same time your mortgage is fully repaid, and has the advantage of covering this expense if you were to die during the term of your policy. The payout amount reduces broadly in line with your mortgage, however your premiums will remain the same throughout.
(Decreasing cover usually has an interest rate cap, meaning that if your mortgage’s interest rate is higher than your insurer’s cap, the payout might not completely cover your outstanding repayments.)
Level cover offers a payout of a specific amount. If you have calculated your family’s cost of living and know what they would need to continue life as they know it without your input, then level cover can provide peace of mind that they will not need to undergo dramatic upheaval should you die.
Increasing cover has the same basic principle as level cover, however it increases annually during the term of the policy. Typically the increases are either by a fixed percentage or they are index linked, so rise with inflation. Indexes track the relative costs of goods and services to chart the changing buying power of a currency (‘inflation’). Money tends to be worth less over time (think about the cost of a chocolate bar ten years ago compared to now), and so increasing cover uses the interest rate to increase your payout size to give you the same relative value as when you took out your policy.
Increasing cover will also mean periodically increased premiums with most insurers.
While everything depends on a person’s unique circumstances, it is generally the case that for the same value of payout, decreasing term policies pay the lowest premiums and increasing term pay the highest.