# What Type of Life Insurance Policy Is Right For Me?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-15
Category: INSURANCE
Category URL: https://financedigest.com/category/insurance
Meta Title: Which Type of Life Insurance Policy is Best for You?
Meta Description: Learn about different types of life insurance policies and find the best one to protect your family financially and provide support for mortgage repayments and
URL: https://financedigest.com/what-type-of-life-insurance-policy-is-right-for-mehtml

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Life insurance is a must-have for most people. It’s the only way to ensure that your family will be financially secure if something happens to you. It can also help pay off debt or provide support for mortgage repayments and funeral costs.

But what [type of life insurance](https://www.financedigest.com/types-of-insurance-for-yourself-and-your-family.html "Types Of Insurance For Yourself And Your Family") policy should you choose? There are many different types of policies available, each with their own pros and cons. The best choice depends on your [personal circumstances and financial](https://www.financedigest.com/best-guide-to-build-a-personal-financial-plan.html "Best Guide to Build a Personal Financial Plan") goals.

**Why should I [buy a life insurance](https://www.financedigest.com/should-insurers-buy-data-direct-from-their-customers.html "Should insurers buy data direct from their customers?") policy?**

Buying [life insurance](https://www.financedigest.com/life-insurance-why-is-it-so-important.html "LIFE INSURANCE: WHY IS IT SO IMPORTANT?") isn’t just about protecting your loved ones from financial hardship in case you die. It’s also about providing them with an income after you’re gone. A life insurance [policy can support your family with finances](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream"), such as:

- [Living costs](https://www.financedigest.com/five-cost-of-living-trends-expected-in-2023.html "Five cost of living trends expected in 2023")
- Mortgage payments
- [Credit card](https://www.financedigest.com/uk-credit-card-borrowing-rises-by-most-since-2005-boe.html "UK credit card borrowing rises by most since 2005 – BoE") debt
- Funeral expenses
- Childcare costs

If you don’t have enough [money saved up to cover your debts](https://www.financedigest.com/necessary-lessons-in-debt-six-out-of-ten-brits-wouldnt-feel-comfortable-discussing-any-money-issues-with-their-children.html "Necessary lessons in debt? Six out of ten Brits wouldn’t feel comfortable discussing any money issues with their children") or other bills, then it could leave your family struggling. This could result in them having to sell their home or even go into debt themselves.

**[Types of Life Insurance](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need") Policies**

There are three main categories of [life insurance:](https://www.financedigest.com/life-insurance-for-seniors-can-be-a-costly-mistake.html "Life Insurance For Seniors Can Be A Costly Mistake") term, whole life and joint. Each has its advantages and disadvantages, so choosing one over another requires careful consideration.

**Term Life Insurance**

A [term life insurance](https://www.cavendishonline.co.uk/news/term-life-insurance-how-does-it-work) policy provides coverage for a specific amount of time (usually 10-30 years). If you die during this time, your loved ones receive a cash lump sum. [Premiums for term insurance](https://www.financedigest.com/big-data-lowers-insurance-premiums-and-optimises-business-performance.html "Big Data Lowers Insurance Premiums and Optimises Business Performance") are generally cheap, because it only protects you for a limited time, as opposed to the rest of your life. However, it may not be enough coverage for some families.

There are 3 types of term life cover…

**Level term life insurance**

This is the standard form of term life insurance. You pay a small premium every year for a [set period of time](https://www.financedigest.com/oneweb-eutelsat-set-for-secondary-london-listing-the-times.html "OneWeb-Eutelsat set for secondary London listing – The Times"). During this time, both the cost of your premiums and death benefit remain fixed throughout the policy. It’s an ideal option for families looking for coverage for a certain amount of time.

**Decreasing term life insurance**

This [type of cover is often referred to as mortgage life insurance](https://www.financedigest.com/types-of-insurance-coverage.html "Types of insurance coverage"). The death benefit of your policy decreases over time as you make repayments on your mortgage. This way, if you die before it’s repaid, your family is left with enough money to cover the outstanding balance.

**Increasing term life insurance**

Increasing term insurance is a popular choice among many people, because it protects your [policy’s value against rising](https://www.financedigest.com/asian-shares-rise-dollar-dips-ahead-of-fed-policy-decision.html "Asian shares rise, dollar dips ahead of Fed policy decision") costs. The pay out of the [policy increases over time to match the rise in inflation](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult"). This way, your family still receives the same amount of money.

[**Whole life insurance**](https://www.financedigest.com/scratched-ev-battery-your-insurer-may-have-to-junk-the-whole-car.html "Scratched EV battery? Your insurer may have to junk the whole car")

[Whole life insurance](https://www.cavendishonline.co.uk/whole-of-life-insurance) (also known as life assurance) pays out a fixed lump sum to your loved ones when you die. This type of policy is ideal for people who want to ensure that they receive a payout no matter what happens during their life. With this type of cover, your premiums remain fixed throughout the policy, even as you get older or develop medical conditions.

Whole [life policies typically have higher premiums than term plans](https://www.financedigest.com/are-the-over-55s-accessing-their-pensions-early-failing-to-plan-for-later-life.html "Are the over-55s accessing their pensions early failing to plan for later life?"), as cover is permanent. Though they are usually more expensive, whole life plans offer peace of mind knowing your family receives a payout regardless of when you die.

**Joint life insurance**

If you’re married, you might [consider buying](https://www.financedigest.com/4-things-to-consider-before-buying-your-dream-car.html "4 Things To Consider Before Buying Your Dream Car") joint life insurance together. Joint life insurance combines two separate policies into one, which means you’ll pay less overall. The policy usually pays out after one of you dies. The surviving policyholder then has enough money to cover any debts and expenses.

Alternatively, you can choose to have the policy paid out after you pass away. The [money can then go to your children](https://www.financedigest.com/nearly-half-of-parents-still-give-pocket-money-to-their-adult-children.html "Nearly half of parents still give pocket money to their adult children") or other beneficiaries. It can be used to help them [buy their first home](https://www.financedigest.com/think-big-make-your-new-years-resolutions-to-buy-a-holiday-home-in-2017.html "Think big – make your New Year’s resolutions to buy a holiday home in 2017!") or cover their university tuition.

The [key thing to remember about all these options is that they protect you from financial](https://www.financedigest.com/why-financial-planning-should-be-a-key-subject-at-school.html "Why financial planning should be a key subject at school") loss. They don’t provide an income replacement like [pension schemes](https://www.financedigest.com/how-britains-pension-scheme-hedge-became-a-trillion-pound-gamble.html "How Britain’s pension scheme hedge became a trillion pound gamble") do.

**How much cover will I need?**

Ideally, you’ll want enough cover to meet your family’s needs – whether they are [paying off a mortgage](https://www.financedigest.com/7-questions-to-ask-before-paying-off-your-mortgage-early.html "7 Questions to Ask Before Paying Off Your Mortgage Early") or keeping up repayments, settling any debts and paying for general living costs. You’ll also want to consider what happens if you die unexpectedly.

If you have children, for example, you’ll need enough cover to meet their needs while they grow up and take care of themselves. You’ll also need to factor in any outstanding debt, such as mortgages and loans.

You’ll also want to think about how much you earn and spend each month. If you’re earning a lot but spending most of it on bills, you may not need as much cover as someone who earns little and [spends everything on holidays](https://www.financedigest.com/brits-spend-less-than-a-quarter-of-their-holiday-exploring-the-destination.html "Brits spend less than a quarter of their holiday exploring the destination").

**What else should I know?**

There are some [things you should keep in mind when choosing](https://www.financedigest.com/5-things-to-consider-when-choosing-a-challenger-bank.html "5 Things to Consider When Choosing a Challenger Bank") a plan. For instance, you’ll want to check whether your employer [offers life insurance](https://www.financedigest.com/aon-data-empowers-unica-to-offer-flood-insurance-for-5-2bn-canadian-peril.html "Aon data empowers Unica to offer flood insurance for .2bn Canadian peril"). Many companies do, so it’s worth asking your employer..

Also, make sure you understand the terms and conditions of your policy. Some policies come with annual fees and charges. These could eat into your savings and increase the cost of your policy.

Another option you should consider is using an online life insurance broker, such as [Cavendish Online](https://www.cavendishonline.co.uk/how-to-apply#quote-apply-online). They can provide advice as to which policy is right for you based on your circumstances. Furthermore, they can help you find and compare affordable life [insurance quotes](https://www.financedigest.com/as-the-cost-of-living-bites-tackling-insurance-quote-manipulation-is-key.html "As the cost of living bites, tackling insurance quote manipulation is key") from leading providers.


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