What is a term life insurance plan?

A term life insurance plan is the most popular form of life insurance, and is one of the two biggest forms of life insurance offered in the United Kingdom.

A term life insurance plan offers life insurance to a customer for a pre-set term, which is usually the length of their mortgage, but can be until a certain age instead.

Term life insurance plans are rarely offered past the age of 60 or 70, meaning the majority of customers live beyond the end of their plans, making them far cheaper than whole life insurance plans, which offer life insurance for a customers entire life.

How does a term life insurance plan work?

When a customer takes out a mortgage, or has a young child, they will choose to take out life insurance to make sure that their financial responsibilities are met should the worst happen to them.

A term life insurance plan offers life insurance for that period of financial responsibility. If the customer were to die during the term of their life insurance plan, then the life insurance company would pay their family a pre determined pay out, which the family can use to pay off the mortgage, and continue to live comfortably while they try and get back on their feet.

What is whole life insurance?

Whole life insurance is the other main form of life insurance, although it is eight times more expensive on average. Whole life insurance works in a similar way to a term life insurance plan, in that it offers a pay out to the family of a customer in the event of the customer’s death. The biggest difference is that the life insurance plan has no term where death is concerned, and will pay out, whatever age the customer reaches.

Whole life insurance is more expensive because the insurance company have to pay out to every policy eventually.

Why do I need life insurance?

A term life insurance plan, and life insurance in general provides a customer with peace of mind that should the worst happen to them, their loved ones will be provided with a hefty lump sum of money with which to live off until they find their way back onto their feet.

The pay out will nearly always pay off a mortgage, guaranteeing your family somewhere to live.