Types of Life Insurance Plan
Term Life Assurance
Level Term Assurance is the most well known and standard type of life assurance. In return for fixed monthly payments, the amount of life cover to be paid out in the event of death is guaranteed for a fixed term (usually people tend to set this to at least cover the length of time left on their mortgage). The fixed lump sum agreed is paid out if a claim is made during the term.
Mortgage Protection Insurance
Mortgage Protection Insurance also means you pay a fixed monthly premium, but it gradually reduces over the term of the policy, usually used to cover the outstanding amount of a replayment mortgage. The gradually reducing cover means that the monthly premiums on this type of life insurance policy is lower than that of Level Term Assurance.
Family Income Benefit Insurance
This works by paying out a regular tax-free income in the event of a claim. Rather than one lump sum to be paid in the event of your death, the benefit is paid yearly for the remainder of the term. This means that if you die at the end of the 12th year of a 25 year term, having agreed cover for £20,000 per annum, the family benefit plan will pay out £20,000 tax-free for every year of the remaining 13 years - giving a total eventual payout of £260,000. There are also options with this type of life insurance plan to allow for the amount to rise in line with inflation.