Life Insurance - Policy Types

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There is a myriad of life insurance polices on the market, each designed to suit specific personal needs and circumstances. It is for this reason that plenty of research and careful planning is vital before opting for cover.

The following is a short list of some of the most common types of cover.

Term Life

This is the simplest, cheapest and most suitable type of cover for the majority of people. The term of cover usually lasts for 15 - 20 years, sometimes longer; and if the policy holder dies within this period the sum is paid out. If they do not, there is no pay out.

Critical Illness

The exact type of "illness" that is covered with this policy type varies considerably, so it's important to know exactly what type of illness will result in a payout. Common conditions include heart attacks, strokes, multiple sclerosis, loss of limbs, etc.

As to be expected, obtaining insurance for pre existing illnesses can be difficult, and as with "critical illness" policies, premiums are usually higher than normal.

Whole Life

This type of cover often works out the most expensive; as the insurer knows that ultimately they will have to pay out as the policy holder is unfortunately certain to die during the course of the policy. As grim as it sounds, the advantage with this type of cover is that the beneficiary(s) will receive a guaranteed payout upon the policy holder's death.

The one thing that all insurance polices have in common is that being truthful upon application is vital, as failure to do so can result in not obtaining a pay out.

Also, if you are unsure about any aspect of the life insurance policy in question then make sure the insurer addresses any queries.

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