Life Insurance UK Introduction - the concept and practicality of Life Insurance is perhaps something most us would rather not think about  - our own Death. Of course none of us likes to think about this but if we have responsibilities then this is certainly a cover that we should consider essential.  Mainly life insurance uk or sometimes Term Insurance is taken out to cover a mortgage or a loan. If you die then the policy will pay out a lump sum and this can be used to repay the mortgage or the loan, this will ensure that your family are not left with a large debt to service.  Life Insurance uk is usually divided in to three main groups:-

• Term Insurance

• Whole Life Insurance

• Endowment Insurance

Term Insurance - Term Insurance is usually the cheapest form of life insurance that you can purchase. It is cheap because it only pays out if you die within a certain period of time. If you cancel the policy before the end of the term, you will receive nothing, similarly and hopefully, if you are still alive at the end of the policy term, you will receive no pay out or lump sum.  You will be able to select the sum insured and the term, usually 10,15 or 20 years. This type of contract can be used to cover the length of a loan.  The following types of term insurance are normally available:-

• Level Term Insurance

• Renewable Term Insurance

• Convertible Term Insurance

• Decreasing Term Insurance

• Increasing Term Insurance

• Family Income Benefit

Level Term Insurance - This is a very simple type of insurance policy, you select a period of cover in years, then you pick a sum insured. The policy will pay out this sum whether you die on the first or last day of the contract.

Renewable Term Insurance - This type of policy gives you the right to increase your sum insured at various intervals throughout the policy term. This may even be as often as every twelve months. Some insurers will increase cover within certain limits providing you can sign a medical declaration. Sometimes it is possible to increase cover without declaration particularly if you take the sum insured that the insurers offer.

Convertible Term Insurance - This type of policy allows you to convert your contract to either a whole life or an endowment insurance policy without having to provide evidence of good health.  This type of policy can be very useful particularly if you have suffered ill health since the contract was originally taken out.

Decreasing Term Insurance - This policy has a gradual reducing sum insured over the period of the policy. This type of contract is ideal to cover loans, at the end of the period, the sum insured will be zero. It is cheaper as the longer you live, the less the insurance company will have to pay out

Increasing Term Insurance - This policy acts in reverse of the above, each year the sum insured will increase. It is a good way of making sure that your cover keeps pace with inflation. It will also prove useful if you have to extend you mortgage or take out a loan at any time in the future.

Family Income Benefit - This insurance policy is designed to provide a regular income to your dependents should you die. It is normally arranged for husbands and wife’s and can be arranged on a first death basis. It will usually pay out until such time as the dependents can care for themselves.

Whole Life Insurance - The difference between this policy and the above is that it will cover the whole of your life, not just for a set period. The premiums continue to be paid until death occurs policies of this type can be with or without profits. The profits policies are more expensive but then, the payout will be better at the end.  On some contracts, you can elect to stop making payments at the age of 65, obviously, the payout on death will be lower.  Unlike the earlier mentioned Term Insurance policies, this type of policy will have some kind of surrender value if you decide to cash it in at any time, of course in the early years any redemption value may be very low. It is also possible in some cases to borrow on this type of policy.

Endowments Policies - These types of insurance contracts have been much in the news in recent years, they offered a very popular method of repaying a mortgage.  They are basically savings policies with life insurance added in. The life Insurance is normally equal to the amount that the savings policy is expected to pay out at the end of the policy term