Choose between level, decreasing or increasing term insurance, each designed to offer you peace of mind based on your circumstances.
We insure our home and car as we understand that sometimes things can go wrong and we want to protect our most valuable assets against the unexpected. Life insurance operates much in the same way, whereby the policy holder pays premiums so that the insurance provider pays a sum of money in the event of death or illness. However, unlike other types of insurance the policy holder does not receive the payout. Instead, an agreed sum of money is given to the chosen beneficiary or beneficiaries upon the death of the policy holder.
Life cover policies are either in place for a specific amount of time (called ‘term life insurance’) or until you die, regardless of how long that is (called ‘whole life insurance or life assurance’).
Life insurance also differs from other types of insurance as the policy is not renewed annually and is not easily changed. It lasts for a pre-determined amount of time; for example, term policies tend to start with a 10-year term minimum. This is why it is important to choose the type of life insurance policy to best suit your current circumstances and consider what your needs may be by the end of the policy. In other words, what do you want to protect?
Life insurance can be used to help your loved ones mitigate any outstanding financial obligations they may face after you’ve gone: to complete mortgage repayments, to help raise a young family to the age of maturity, to leave a legacy or gift for beneficiaries, to cover outstanding debts that you’ve left behind or simply to help pay for funeral costs.
A popular reason to take out life insurance is so that you can help your loved ones pay the mortgage if you are no longer around. Without your income, mortgage repayments may be more difficult to manage, and life insurance can mitigate for this.
You could choose decreasing term life insurance, which adjusts to take into account the length and rate of your repayment mortgage and pays out less as your mortgage gets smaller. Alternatively, level term life insurance gives a one-off sum that can be used to leave an inheritance for loved ones, level term life insurance is often used to help pay off interest-only mortgages or any outstanding debt or loan where only the interest is being paid down.
Having a child is a life-changing experience in many ways. Caring and providing for your children becomes your primary concern, but it is important to consider how their needs would be met or how your partner would cope financially with raising a family if you were suddenly no longer there. While this is an uncomfortable thought, life insurance is a simple way of providing further care.
It will also offer you and your family peace of mind to know that they are provided for. If you were to die, your family could benefit from knowing the pay out of a life policy could help them live in the same house, attend the same school or university course, or simply to be able to afford to maintain their way of life during a difficult time.
You may want life insurance to pay off the cost of your funeral so your death doesn’t create financial difficulty for your loved ones. According to Royal London’s National Funeral Cost Index 2017, the average cost of a funeral in 2017 was £3,784, this is an increase of 3% in just a year, this meant the funeral costs rose faster than the cost of inflation. Over 50s policies - as well as level and increasing term policies - can be used to contribute towards funeral payments.
Since no life insurance policy financially benefits the policy holder, one of the most important considerations when you take out a policy is whom you want your beneficiaries to be. Most commonly, the beneficiary will be your spouse, children or other dependants and your payout will go to them.
It is possible to take out a life insurance policy to pay out to someone outside of your family by putting the policy into trust. Some insurers offer this option, whereas with others you may need to make the arrangements yourself. There are also circumstances whereby a policy in trust will be exempt from inheritance tax, however the conditions for this situation may be complicated and must be discussed with an independent financial advisor or solicitor.
Joint life insurance is a form of life cover which insures two people, this means the chosen amount of cover is paid out if the first person dies within the length of the policy. This type of life insurance policy is often taken out to cover a partner or spouse. Alternatively, you could pick a policy that pays out to your beneficiaries, when both policy holders die.
It is important to fully understand the pros and cons of having a joint policy in place. For example, a pro of this type of policy is that it is often cheaper than two single life insurance policies, however, a con may be that the provider usually only pays out once, leaving the surving partner uninsured once a claim has been made. Also in the unfortunate event that the relationship doesn't work out, the insurance provider may not offer the option to transfer the policy into two seperate single polcies. Remember, if you have to take out a policy later your age and health at this stage will be reassessed and usually mean premiums will be likely to be higher.
You could also arrange for both lives to be covered by having two single policies which would pay out individually.
Post Office does not offer joint life insurance policies, but you can take a look at our single life insurance policies and see if getting one each with your partner might suit your needs.
How much life insurance costs will depend on your individual circumstances - how much cover you'll need, the type of policy, your age and your lifestyle.
There are two ways to work out how much you would like to pay for life insurance. You can decide how much monthly premium you would like to pay and, based on your personal circumstances, see how much cover that will provide for you.
Alternatively, you can decide on a lump sum that you consider to meet your needs and see how much that will cost you in premiums each month. The higher the monthly premium you pay, the higher the payout for your loved ones when you die. Do bear in mind that there are other considerations that will affect how much cover you are eligible for.