What's life insurance?

There are two types of life insurance, as well as some variations you could consider. They both aim to pay out a lump sum when you die during the policy length:

Level – this type of policy is designed to pay out the amount you chose to cover, no matter when you died during the policy length.

Decreasing – this is a policy where the amount that would be paid out gradually goes down as the policy continues. It’s designed to work alongside a repayment mortgage, so the amount of payout goes down roughly in line with your shrinking mortgage debt.

There are lots of other choices you can make about your life insurance policy before taking it out. Like how long you want the policy to run for (the ‘Length’) and how much you want it to pay out (the ‘Amount of cover’). Different providers also offer different options on the basic package, such as indexation options. You can find a list of the most common ones at 'What are the cover options?' tab above.

When you take out a life insurance policy you could choose to add Critical Illness Cover too at an additional cost. This is similar to life insurance in that is designed to pay out a cash lump sum during the policy length. But in this instance it could pay out if you are diagnosed with a specified critical illness, for example some cancers or heart disease. Exactly which illnesses are covered will be described in the terms and conditions of the policy you choose.

You can buy Critical Illness Cover and life insurance together, so your insurance could only pay out either on diagnosis of a critical illness or if you die during the policy length. Alternatively, you could buy them as separate policies, so each policy would pay out independently, but this may prove to be a more expensive option.