Life Insurance Cover Options Life Insurance Options With so many life insurance cover options now available in the U.K., people are sometimes confused about how to make the right choice. There is no hard and fast rule when it comes to choosing a life insurance cover. Your present financial situation, your age and future prospects will determine which is the right life cover option for you.

The payout comes only if the policyholder dies during the term. Whole of life policies also called permanent insurance come with a guaranteed death benefit.

There are a number of options within these two categories. In term life insurance you could choose between a level term, increasing term, decreasing term, convertible term, renewable term and family income benefit policy. In a level term policy the premium stays locked in at the same level throughout the life of the term, but the amount of death benefit also does not change. Those who want the assured sum to rise steadily opt for an increasing term policy. The increase is according to either a set percentage or the retail price index (RPI). A decreasing term or mortgage protection policy has an assured sum that shrinks progressively. It is linked to the amount of mortgage remaining to be paid.

A convertible term policy is for those who might want to switch to a permanent insurance policy some time in the future. A renewable term policy helps refresh the insurance without the hassle of a medical check, but the premium also rises. The family income benefit under a term life policy insures that your loved ones get a regular monthly in case of your sudden demise.

Whole life insurance policies also offer options. Under a non-profit policy only the guaranteed sum is paid on the policyholder’s death. The profit variation fetches the designated survivors the guaranteed sum as well as whatever is earned on the policy till the time of the policyholder’s demise. There are also unit-linked plans where the money is invested in units and the payout includes the assured sum as well as what is earned from the investments.

Most life insurance cover plans today come with additional benefits. Among them is the critical illness cover, which makes it possible for the policyholder to claim the assured sum in case of serious health problems like heart disease, cancer, major organ transplant, disability or coma. Also available is the waiver of premium benefit under which the insurance company takes care of the premium for a specified period of time should the policyholder be unable to work because of illness or disability.