Mortgage Life Insurance

Life Cover

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Life Insurance Classification Made Easy

Life insurance, like so many other forms of insurance, is of vital importance. To put a life insurance policy simply - the insurer promises to pay out a certain amount on either the policy holder’s death or an event such as a terminal or critical illness. For most it is the principal way of ensuring that their close family are as well provided for as possible in the event of a worst case scenario.

Life insurance can be separated into two basic classes, and it is important to understand what both mean in order to make sure that you fully understand your policy when you come to getting one.

Temporary

Temporary life Insurance (also known as ‘term assurance’) provides for life insurance coverage for a specified term of years at a rate agreed with the insurer. Generally speaking this type of insurance offers financial protection in the event of death and nothing else, again, generally speaking premiums are relatively low as the policy holder and insurer agree that the death of the insured is unlikely during the term of coverage.
The policy holder insures his life for a specified term. If they die before the end of that term then the insurer will pay out to the designated beneficiaries. If he does not die before the end of the term then he receives nothing.

Permanent

Permanent life insurance is life insurance that remains in force until the policy pays out due to the death of the policy holder, or other circumstances such as terminal or critical illness agreed with the insurer at the establishment of the policy. The policy cannot be cancelled by the insurer unless in event of fraud on the original document. Often permanent insurance can build up a cash value over time, benefiting both the insurance company and the policy holder as the former does not have to pay out a great amount, and the latter does not have to pay in a great amount. It can also result in policies accruing large values. This money can be accessed in advance, either by withdrawing it early, or surrendering the policy and receiving a surrender value that will be a reduced amount from the full value of the policy.

Permanent life insurance can be categorised further, and as such when getting a policy it is of vital importance that you know exactly what it is that you are purchasing and what the benefits are to both you and your beneficiaries. When looking for a life insurance policy make sure that you consider a number of different options to make sure that you get the best possible policy for you, and a good place to start for excellent value deals can often be supermarket insurers – take a look at the life insurance offered by Legal & General, for example – but always make sure you shop around. A good place to start would be a place a price comparison website, such as uSwitch.