If you’re wondering which type of life insurance is best for you, let Daddy Insurance show you the various options to make your decision easier & more informed.
Find out which type of life insurance is right for you.
The type of life insurance that’s best for you depends entirely on your personal situation and specific needs. Whether you’re the household breadwinner or a stay-at-home parent, there’s a life insurance policy for you.
From life insurance policies for restrictive budgets to critical illness and income protection insurance, this guide aims to take you through everything you need to know to make an informed decision. Scroll on to learn which option is the best fit for your needs.
How does life insurance work?
Generally, life insurance policies will pay out a lump sum in the event of your death. This is awarded to your survivors and helps to support them financially while they’re grieving. It also helps to cover the cost of any outstanding debts that you leave behind.
Life insurance pay-outs are a safety net, especially in traumatising and unforeseen situations. They help with day to day living costs such as mortgage repayments and household expenses in general. Plus, they can leave an inheritance behind for your loved ones.
Life insurance is a very important investment. Which is why choosing the right policy for your needs is essential. There are many different life insurance options to choose from and the right fit for you will depend entirely on your personal circumstances.
Let’s take a closer look at some of the factors that you need to think about before making your decision.
What should I think about before choosing my life insurance policy?
When deciding which life insurance type is best for you, it’s important to consider the below first:
Joint Life Insurance
For couples, especially ones with children, a joint life insurance policy is a great option. This type of policy awards a mutual financial stake to both participants. If one of you were to die during the agreed period of cover, a lump sum is paid out and the policy expires.
It’s also worth mentioning that this means the surviving person is no longer covered by the policy. This life insurance option is ideal for couples who will only need a single payout. It is also generally much more affordable as opposed to paying two individual life insurance premiums.
Decreasing Term Life Insurance
If you’re responsible for mortgage repayments, decreasing term life cover is a viable option. This type of life insurance policy generally has one of the lowest premiums too, so it’s great for tighter budgets. Decreasing-term life insurance ensures that any outstanding debts are covered in the event of your death providing the policy is still active.
Decreasing-term basically means that the amount paid out reduces as the outstanding balance of your financial commitments decreases. The main benefit of this type of policy is that your mortgage (and any other financial obligations) is not left to your survivors.
Level Term Life Insurance
Level term life insurance policies pay out a fixed lump sum that remains the same throughout the duration of the policy. This provides a security blanket for people from all walks of life. So, whatever your current status, this is a great option to think about.
Level-term life insurance guarantees your beneficiaries will receive a specific sum should you die while the policy is active. This sum is agreed by yourself and your insurance provider at the time the policy is taken out.
Increasing Term Life Insurance
Increasing-term life insurance offers a lump sum payout that increases each and every year by a fixed amount. The yearly increases continue for the duration of the policy.
This type of life insurance generally is best for anyone wanting to protect their policy’s value. It helps your policy maintain its worth even as the cost of living rises.
Whole of Life Insurance
Whole-of-life insurance policies provide the policy holder with life-long cover. It guarantees that your beneficiaries receive a payout when you die, whenever that may be.
This type of life insurance is best for anyone looking to leave loved ones an inheritance. But, one thing to be aware of with this type of policy is that if you purchase a whole-of-life insurance policy when you’re still young, you could actually end up paying more into the life insurance policy than it will inevitably pay out.
It’s also important to highlight that this type of insurance comes with the priciest premium.
Critical Illness Cover
Critical illness cover is very different to life insurance in when it pays out.
Firstly, it generally pays out a lump sum upon a viable claim while the policyholder is still alive. The policy then ends.
This can be vital as it usually covers the cost of living. Things like mortgage repayments, utility bills and even food shops should be taken care of with your critical illness policy.
Critical illness cover is often offered alongside life insurance as an add-on. It’s best for anyone whose income is detrimental to their family’s financial obligations.
Income Protection Insurance
Income protection is generally paid out on a monthly basis. Typically, the amount you’ll receive is around 70-75% of your income for the duration you’re unable to work. Income protection insurance offers you financial stability so that you can focus on getting your health back to its normal levels.
With accidents, injuries and debilitating illnesses always a possibility, income protection insurance provides peace of mind. It allows you to spend more time living and less time worrying about what’s round the corner.
Income protection insurance is also often offered as an add on to an existing life insurance policy and it’s best for anyone whose household is reliant on their income.
Income protection insurance provides a security blanket in many scenarios. But, is it worth the investment for you? Simply put, everyone is different and your individual circumstances will dictate whether income protection insurance is essential for you.
What factors affect the price of a life insurance policy?
The cost of your life insurance premium is dictated by your personal circumstances along with the level of cover required. There are a number of factors that will impact the price of your life insurance policy. These include:
Other things that will impact the cost of your life insurance policy include the length of the policy and the level of cover. The longer you want a policy to last will ultimately impact the price. As will the level of cover you require. Think about how much you want and need the policy to pay out.
Why Secure Life Insurance with Daddy Insurance
At Daddy Insurance, we offer free quotes from our panel of insurers. We’ll also help you to conduct a full comparison between the best life insurance options to suit your needs. All of our quotes are completely personalised. Plus, our experts are always on hand to help guide you through the entire purchasing process.