Different types of life insurance
Perhaps one of the best-known terms of life insurance, level cover provides an exact amount of coverage that doesn’t change. This means that if you die at any point during the term of your policy, your family will receive the same amount of money, regardless of inflation or how close the policy is to its end.
Monthly payments made for level cover do not change and the policy runs for a specific term. Once the policy ends you would have to take out another policy if you still need insurance.
If your mortgage or other debts are going to shrink over time, or you can see a point when your family will become financially independent, decreasing cover can be a good-value term insurance option.
With this type, the payout on death reduces gradually over the term until the policy ends. Taking out this sort of policy ensures that a gradually reducing repayment mortgage can be cleared if you die.
For wage earners worried about helping their family with day-to-day living costs in the event of their death, family income benefit could be a solution. It pays out a regular tax-free income to your family, so can replace missing earnings.
The income is paid only until the end of the policy term, so if you take out a 20-year policy and die 10 years into it, your family receives the income for 10 more years. If you die 18 years into the policy, they get the benefit for only two years.
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