Post Office Term Life Insurance comes with Terminal Illness Benefit as standard. We have three types of cover to suit your lifestyle.
Term life insurance covers you for an agreed period of time, for example 30 years. This is the ‘term’ of the policy. This type of insurance is often taken out to cover a loan, like a mortgage, or to cover an ongoing financial obligation, like raising children, or can even be used to cover the costs of a funeral. So if you have 20 years left to pay on your mortgage, you can take out a term life policy that will cover you for this period of time. There are three different kinds of term life insurance policy, and it’s important to understand the distinction between them…
Decreasing term means that the amount your insurer pays out will decrease over time. This is used when a debt, loan repayment or mortgage will also reduce over time. In the example of a mortgage, your policy will stay in-line with the amount you owe your mortgage provider for the same length of time as the mortgage. This type of policy usually offers an interest cap, so if your mortgage has an 8% interest rate but your insurer has a 7% interest rate cap, the payout might not completely cover the outstanding debt. It’s therefore important to know as much detail as possible about your mortgage when getting your quote.
Level term is like the name suggests – your dependents will get the same amount, no matter when they need to claim. However, this doesn’t adjust for inflation, so if you have a long term policy the same amount of cover may seem worth less over time because of the increasing cost of living.
Increasing term means that your insurer will pay out more over time, and it’s usually for people whose families may need more help as the years go by – for instance, if you have young children. This type of cover is designed to adjust to mitigate the effects of inflation and will have reviewable premiums which means you allow the insurer the option to increase not only the payout, but also the premium. The increase can either be index-linked (in-line with inflation) or a fixed rate, the benefit of the latter is that if kept long enough it may rise faster than the rate of inflation.