How to choose life insurance

Have you decided to purchase a life insurance policy but don't know how to choose the one that's right for you? Life insurance is a great way to provide for your dependants after your death, allowing them to move on with their lives without the stress of mounting bills and financial pressures. You can find out more on our what is life insurance page. Read on to find out what you need to consider to help you choose the right policy.

Do you want the level of life insurance cover to stay the same?

Although there are others, the two main types of life insurance are level term life insurance and decreasing term life insurance.

As their names suggest, with level term life insurance, the amount of cover remains the same throughout the policy term, whilst with decreasing term life insurance, the level of cover decreases throughout the policy term. Because of this, premiums for decreasing term life insurance are less than a level term life insurance premium for the same initial level of cover. Decreasing term life insurance is also often known as mortgage protection life insurance, as the amount of cover decreases, roughly in line with the amount owed on a standard repayment mortgage.

The following guidelines have been created to make it easy for you to choose life insurance that suits you:

Level term life insurance could be right for you if:

  • You have debts that would need to be paid off if you died.
  • You want to leave your dependants a lump sum to help them cope financially and cover a range of expenses.
  • You have an 'interest only' mortgage and are worried that if you died your family wouldn't be able to meet the monthly repayments.

Decreasing term insurance could be right for you if:

  • Your dependants wouldn't be able to pay your repayment mortgage after your death but would be able to cover other expenses.
  • You have other debts where the amount owed is reducing over time, roughly in line with a repayment mortgage.
Choosing Life Insurance
How to Choose Life Insurance

How much life insurance cover do you need?

If you have decided that you only wish to protect your mortgage and that mortgage protection life insurance is right for you, working out how much cover you need should be straightforward. The amount of cover will simply need to be in line with the outstanding balance on your repayment mortgage. The policy term should match the number of years remaining on your mortgage.

However, if you decide that level term life insurance is right for you, you may wish to consider any expenses that your dependants would be unable to pay in the event of your death. This could include, but is not limited to, mortgage repayments and other bills, childcare fees and household expenses.

As you would expect, the higher the level of cover, the higher your premiums will be. Our life insurance calculator is available to highlight some of the things you may wish to consider. Press the button below to go there now.

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Do you need a joint life insurance policy?

If you are a couple looking into how to choose life insurance, you may be wondering if you should choose a single or joint life insurance policy. However, just because there are two of you doesn't mean a joint policy is the only option. The first step to deciding between single or joint life insurance is to understand the difference between the two types of policy. If you take out two single policies, they will have entirely separate terms and conditions. If you die within the term, your policy will pay out with no impact on your partner's policy.

However, if you take out a joint policy, it will pay out for the first claim only and the policy will cease. For example, if you both died in a car accident, your dependants would only receive one payout.

Do you need critical illness cover?

If you compare life insurance quotes with us and are looking to take out a policy, critical illness cover is another important consideration. Most life insurance policies will only pay out in the event of death, so this type of cover is a good way to ensure that if you suffered one of the specified critical illnesses named in the policy, you and your dependants would receive a lump sum so you can concentrate on spending time with loved ones and getting better rather than worrying about your finances. It can also help towards any costs incurred due to your illness, such as making your home more accessible or paying for care. As always, it is important to check the cover provided before selection as many policies have differing levels of cover and the critical illnesses which are included vary from provider to provider.

Compare life insurance

Ready to compare life insurance quotes? You can use the Compare Cover comparison tool to view and compare quotes in one simple search. You can then edit your selection to compare the prices for different levels of cover and types of policies. Compare life insurance quotes now.


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