Types of life insurance

Whole of life insurance

This type of insurance covers you for the whole of your life, rather than a fixed period. You pay into a policy, and the insurer agrees to pay your loved ones in the event of your death, no matter when that might be. It’s a good kind of policy to have if you want worry-free cover, without the hassle of taking out a new policy each time a policy term expires.

Whole of life insurance (sometimes called ‘life assurance') is usually significantly more expensive than term life insurance for the same size of payout, and normally has functions besides insurance. For instance, you may be able to borrow against the value of your whole of life insurance, which is one reason for the inflated cost.

Certain whole of life policies are designed to be cheaper than term life. This is because they cover shorter periods for smaller payouts and don't come with extra options such as borrowing against the value of the policy. An example of this type of policy is the Post Office Over 50s Life Cover, which guarantees acceptance for UK residents aged between 50 and 80.

Read about life insurance vs life assurance

Joint life insurance

If you have a partner and want to make sure that your other half, and children, will be looked after if one of you should die, then a joint life insurance policy could be right for you.

It insures two people at the same time and pays out if one of you passes away. It can make life easier knowing you’re both covered. But remember that, in most joint life policies, once you make a claim, the partner who’s left won’t be covered any more. They’ll need to take out their own individual policy after that.

Post Office offers joint life policies that protect two people under one policy with one monthly premium payment. These policies only pay out once if a policyholder dies within the term. Two single policies protect each policyholder separately but will mean paying two premiums each month.

Critical illness cover

Critical illness cover usually pays out a lump sum if you fall seriously ill. It’s a useful way to help towards your expenses if you’re too ill or you’d struggle to meet bills like medical expenses, or any modifications needed to your home.

The payout will either be a percentage of the overall payout or a defined lump sum. This will differ by insurer. And critical illness cover can’t normally be added to an existing policy but must be bought at the point the policy is taken out.

It’s important to make sure you know what critical illnesses are covered by your policy, and what length of time it covers.

Critical illness cover explained 

Terminal illness cover

Terminal illness cover will pay your family a lump sum if you’ve been diagnosed with an illness from which you will die in the next twelve months.

At what may be a devastating time for you and your family, having terminal illness cover can help you all by easing your financial worries.

Terminal illness cover explained

Children's cover

Children's cover pays out if an insured child falls seriously ill, usually with a single lump sum payment. It can help towards your expenses if your insured child is too ill or you’d struggle to meet bills like medical expenses or any modifications needed to your home.

The payout will either be a percentage of the overall payout or a defined lump sum. This will differ by insurer, and children’s cover can’t normally be added to an existing policy but must be bought at the point the policy is taken out.

It’s important to make sure you know what is covered by your policy, and what length of time it covers.

Children's cover explained