Quick Quote Life works with many of the leading life insurance providers to help find you a great deal based on your individual needs.
Get a no obligation quotation and let us help you save money today. If you are looking for more information before you give us a call then our guide can provide you with everything you need to know. Use our helpful 'jump to' section to get right to the part you are looking for;
Definition of term life insurnace - term life insuance runs for a set period of time. That could be, until your kids have left home or the mortgage has been paid off, or for a full term, the choice is yours.
If flexibility is what you are looking for then Term Life Insurance might be the one for you.
Our trained advisors will ask how long you want the policy to run for, and how much you want it to payout -the price will be dependent on your age, health and occupation amongst other factors.
One of the benefits of term life insurance policies is that the insurer will only pay out if you pass away during the fixed term, so there's less risk for them which in turn makes the premiums cheaper than other policies such as Whole of Life Insurance.
Term Life Insurance is by far the most straightforward type of policy, but there are still some big decisions to make.
There are two main types of Term Life Insurance, Level Term and Decreasing Term.
Level Term means your policy will pay out the same amount if you die at any time throughout the insured period. You agree the amount of cover and how long you want it run for.
Decreasing Term is a cheaper option; this is where you might decide you need less cover as time goes on. With a Decreasing Term Policy, the payout reduces by an agreed amount each year.
Typically Mortgages have this type of policy set up to run alongside. This is because over time your mortgage normally reduces as you continue to pay it and you may have also reduced other debts as time goes on. This then means you are leaving less debt behind to your family and therefore need less cover as time goes on.
A decreasing term insurance might be right for you if you have a young family and a long term left on your mortgage. Because your cover decreases over time you are seen as a smaller risk for most insurers. Because of that, your premiums could be a cheaper.
Level term has a fixed payout amount that doesn't change with the remaining time on the policy and is designed to leave a large financial sum to your family when you die. Decreasing term is often linked to a a mortgage so that your family won't have to worry about paying it off if you die or become critically ill (only if you add critical illness cover).
Therefore, the amount of cover that would be paid out on a decreasing term decreases over time but your monthly premiums will remain the same. You can review these premiums with policy providers at a later date to see if you can make any savings.
A level term will not decrease and neither will the premiums, however they will be more expernsive per month than a decreasing policy. For example you might pay £10 per month for an initial £50,000 worth of decreasing cover or £20 per month for £50,000 worth of level cover.
If you had roughly £100,000 left on your mortgage when you take out level term life insurance then this is an example of how the figures would work for a level term and decreasing term policy;
The nature of decreasing term life insurance polices linked to mortgage repayments then leads to the next point - how does age affect term insurance rates?
Generally the older you get the more your permiums will increase across all life insurance products but with decreasing term it is affected more directly. This is because you tend to take out a mortgage in your earlier years and spend the best part of your life paying it off.
However, premiums do not increase dramatically with age for decreasing term as the risk is buffered by a decreasing amount on your mortgage as you get older - hence smaller payouts for the insurer.
You will see a dramatic difference in premiums when you want to add critical illness cover, usually past the age of 45. This is becuase the risk of you becoming critically ill as opposed to dying jumps tenfold as you move into your twiglight years. Therefore the insurer raises the premiums to offset the risk of you becoming ill and unable to pay off your mortgage.
If you want to add critical illness cover then we always advise you to do it sooner rather than later so that you can save on heavy premiums.
Whole of life has no terms and is guaranteed to provide a payout to your family or inheritors. This obviously makes it more expensive because the insurance providers will eventually have to pay out. With term insurance there is a calculated risk for the insurance provider and that is based on the likelihood that you will die in the term period. If you do they will have to pay out the assured amount but if you survive the policy terms then they will not have to payout (bu don't see this as a negative - you're still alive!)
Here are the general differences in the polices;
This type of Policy is a short-term policy that normally gives you the option to renew the policy at the end of the agreed period, most Renewable Term Life Insurance Policies run for yearly periods, Premiums typically increase with your age as the risk of paying out increases.
With whole of life insurance there is a cash value and you can sometimes use this as an atypical savings or investment pathway by using the cash value in the provider’s investment avenues. This allows you to either guarantee a return or pool the money into higher risk investments with no guaranteed return. Because the policy is designed to cover you for life you are able to withdraw a cash value equal to the premiums paid on the sum assured.
With term life insurance policies this is not possible because the policy isn't designed to cover you for the whole of your life - you take the chance that you will die in the time scale agreed on the terms, for example 30 years. However, if you don't die within the term period this is no loss for obvious reasons!
In some cases you can borrow against the cash value of a term assured sum on term life insurance polices but you cannot cash out on them.
At Quick Quote Life we understand that insurance can be a bit confusing.
If you want to get an estimate of how much you might have to pay for your Life Insurance contact us now for a free no obligation Life Insurance Quotation