Long Term Life Insurance – Your Guide

Protection for Life-Long Peace of Mind

Taking out a Life Insurance policy is probably the most considerate and responsible thing you can do for those you care about the most. Whether you’re single, married, or in a civil partnership, got kids or not, pay rent, on the first rung the property ladder or halfway up – life cover is a must for most people – whatever stage of life you’re at.

It’s a fact that none of us can predict what lies ahead in life, it’s a sad reality that people do die unexpectedly or are diagnosed with a terminal illness. Taking out life cover early on means making monthly payments that cost less than the price of a take-away, so those you leave behind won’t have to fork out to cover the cost of your funeral and unpaid debts.

However, what is certain is taking out a long term life insurance policy early on in life could be hugely beneficial. With youth, health and fewer age-related medical conditions on your side, insurance companies will view you favourably as a low risk customer, which means your monthly premiums will cost you very little.

What is Term Insurance?

A Term Life Insurance policy is the type of life protection insurance that covers your life for a set amount of time. It’s a contract between you and your insurance company where you agree to pay monthly premiums for the length of the policy term and the insurer agrees to pay out a tax free lump sum if you die during that period of time.
There are three types of Term Insurance. Level, Decreasing and Increasing.

With Level Term life insurance cover, your premium payments and the amount you’re insured for stays the same throughout the entire term of the policy.

Also called ‘mortgage life insurance’, with a Decreasing Term Insurance policy, even though you pay the same premiums each month, the tax free amount paid out shrinks along with your mortgage balance. If you die before you’ve paid it off, the policy will pay the remaining amount left on your mortgage.

The opposite is true with an Increasing Term Insurance policy. The pot of money paid out if you die during the term of this type of policy actually gets bigger, leaving your dependents with an amount of money that’s in line with the cost of living at the time of your death. However as the pay-out figure increases, so does your monthly premium, so you’ll need to make sure you’re prepared for it to increase year on year.

How Many Years Should I Cover my Life For?

You can choose to cover your life for a specific length of time, either for the short term from between one and five years, or in the longer term up to 70 years, depending on what you need life insurance cover to pay for if you die.

Whatever your reason, there will be minimum and maximum length policies you can choose from, depending on the terms offered by the insurance company.

If you’re in your twenties and you’ve taken out a 40 year mortgage, then having a decreasing term life insurance policy that runs alongside it, could be a reasonable length of time to opt for. If you were to die at any stage during that 40 year period, then your mortgage balance would be cleared.

Alternatively, if you’re taking out a level term policy to pay a set lump sum to your family while they are dependent on you, then you’ll need to think about how long your children are likely to live at home. That could be 25 years. On the other hand you may want a longer increasing term policy that covers your partner later on in life, or to cover inheritance tax.

Why are Guaranteed and Reviewable Premiums important?

Before signing the dotted line on any life insurance policy, it’s really important to be 100% sure of what you’re buying. An insurance broker worth their salt will be able to tell you the difference between the two and point out the pros and cons of each one.

Buying a policy with guaranteed premiums simply means that your premiums will stay exactly the same throughout the lifetime of your policy – ie they won’t go up or down. However if you choose a policy with reviewable premiums, your insurance provider can review what you’re paying at any time during the term, and decide to increase them. These increases won’t have anything to do with the fact that you are aging or your health is declining – they have more to do with the insurance company’s own exposure to overall risk and its own financial situation.

This is why speaking to an Insurance Adviser should be your first move.

Best Advice for Life

Life Insurance and Income Protection is affordable and easy to set up, however there are many providers in the insurance market, so doing your own research and completing quote applications can be time consuming and often confusing. We have an in-depth knowledge of the insurance marketplace and can help you find the right insurance policy providers for your individual circumstances.

Not just for what you need today, we can help you plan for what you’ll need in the future to ensure you have the right type of protection in place throughout your life. So whether you’re looking for insurance quotes for income protection, critical illness insurance, or long term care insurance, we’ve got you covered for life.