Rates for life insurance

Rates for life insurance vary according to the type of insurance that you choose. Since the whole purpose of life insurance is to protect your family from financial hardship in the unfortunate event of your death, it is very important that you choose the right type. To help you do this, and see what the best choice is for your family, we have listed below the most popular options.

Level term life insurance. This is perhaps the simplest policy of all; at the outset a fixed lump sum is decided upon to be paid out in the event of the policyholder's death, provided that the policy is still in force at that time; and the length of the policy is fixed. At the end of the policy period there is no cash value. The advantage of this type of policy is that you would know exactly how much your beneficiaries would receive, but a disadvantage is that on a longer term policy inflation could eat away at the value of the benefit.
Decreasing term life insurance. This is meant to cover the repayment of fixed liabilities such as mortgages or large loans, which can be expected to decrease as time goes on, provided again that the policyholder dies during the term of the policy. Because the benefit payable decreases gradually, these policies are normally cheaper than level life ones.
Whole of life policies. As the name suggests, these are policies which last for a policyholder's entire life, and since they are designed to pay out when that policyholder dies there is a guaranteed value at the end.

Whilst these are the most basic forms of life insurance there are many, many variations, because we all have unique circumstances that we need to take into consideration. For these reasons buying life insurance requires a lot more care than is necessary with routine cover such as home or car insurance, and it is extremely important to discuss the matter with a competent financial adviser who is authorised and regulated by the Financial Services Authority (FSA).