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What are the Different Types of Life Assurance Policies?

As they say, “Different strokes for different folks.” There are different types of life assurance policies that are designed to address different needs and family situations. Let’s take a quick look at these, shall we?

Whole Life Assurance

As the name suggests, this covers the duration of one’s life and will pay upon the insured’s death. This is basically a protection policy, safeguarding the financial standing of beneficiaries should the insured die. Premiums are reasonably priced and are usually payable throughout the life of the policy. However, there are some that allow for paid up coverage if the cash value accumulation of the policy is able to buy such cover.

Term Life Assurance

Although this only covers a specified fixed term, a portion of the premiums may be kept to earn interest earnings. (This is for “buy term, invest the difference” policies.) This means that upon the expiry of the insurance cover, the insured will receive the cash accumulations. If the insured dies before the policy expires, then income earnings at the time of death.

Last Survivorship Life Assurance

This provides cover for a couple, wherein the payout will be made upon the death of the last survivor. This means that if the policy covers a couple, the payout will be given when both spouses die. There are policies that allow coverage for more than two lives.

Endowment Life Assurance

This provides life insurance coverage for a specific number of years. When the policy matures and the Insured is still living, he receives the endowment amount. After this, the policy is considered expired and there will be no life insurance coverage provided by this policy. When the insured dies within the coverage of the policy, the beneficiaries will receive the guaranteed death benefit. Endowment life assurance policies provide both protection and investment opportunities – a portion of the premium is invested and accumulated. However, please remember that endowment products are one of the most expensive kinds of life assurance policies.

Convertible Term Life Assurance

This starts out as a term life assurance product and will later be converted into an endowment or whole life policy. The conversion should only be exercised at a specified period. The advantage of this is that the person does not need to provide additional medical proof of insurability or undergo medical exams at the time of conversion. This allows a young family man to afford high levels of insurance coverage for a small amount of premium, and later, when he can afford it, he can convert to permanent policies.

Group Life Assurance

This is life assurance provided for groups, such as a group of employees or members of a civic organization such as the Rotary Club. Group life assurance policies usually don’t require medical exams but may cease providing cover once a person quits the company or the group and is not renewed for the next year.

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