Life insurance is an insurance product that provides cash sums if the life insured were to die. You can choose to have the insurance on either a single or joint basis. Regular premiums must be paid to the insurer by the policy owner.
The policy owner is not purchasing insurance to cover a tangible or known value, unlike home or auto insurance. The policy owner is protecting his family, mortgage, and dependents from the effects of the life assured's death. Life insurance advice is necessary for everyone.
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Level term insurance
For a fixed amount, say £100,000. Level term insurance can be taken out. The policy's term will continue to pay the same amount of £100,000. If the life insured were to die, the payout would be full of £100,000.
Term insurance
Reduced term insurance can be taken out with a minimum of £200,000. Over the term of the policy, the coverage amount drops to £0. This type of coverage is ideal for protecting a capital-interest repayment mortgage.
The payout would cover the remainder of the mortgage if the life assured suffered a loss of life during the mortgage term and the life insurance term. This debt can be eliminated for the remainder of the family.
Whole life insurance
This type of insurance is different from term insurance. The sum assured does not have to be lost for a set period. The insurance policy owner must continue to pay monthly premiums to receive the payout upon death.
The insurer will pay the claim if the life insured dies within the first two years after they have started the policy.