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A life insurance policy is an insurance contract that caters for your dependents by paying out a large sum of money. This occurs when the policyholder is diagnosed with a terminal illness or passes away during the contract period. The aim of this policy is to provide for your relatives when you are no more, ensuring financial security and peace of mind during the most difficult moments. Most people are becoming aware of the importance and benefits of owning life insurance. A 2018 report by S&P Global Market Intelligence shows that the life/annuity insurance industry is worth $37.9 billion (after taxes).

Types Of Life Insurance Policy

It is important to select the life insurance policy that suits your situation. There are two types of life insurance policies: level term life insurance and decreasing term life insurance.

Level Term Life Insurance:

With this type of insurance policy, the insurance company will pay out a fixed sum of money to dependents of the deceased policyholder during the specified timeframe. When purchasing a level term life insurance policy, the term length will be agreed upon by the policyholder and insurance provider. Regardless of how far such a policyholder goes into the term, the payout stays the same.

Level term life insurance ranges from 5 to 50 years, but it's generally common for policyholders to have terms within 10 to 20 years. This insurance policy is costlier than its counterpart: decreasing term life insurance. Nevertheless, it helps cover the needs of your dependents till they are financially stable.

Decreasing Term Life Insurance:

This type of insurance is ideal when your dependents need to offset certain debts such as a mortgage. The term length is similar to that of level term life insurance. However, the payout decreases as you move further into the term, depicting the amount of outstanding debt left. This type of insurance policy is known as mortgage life insurance. The term length is identical to the term of your remaining debt, making it cheaper over time when compared to level term life insurance.

How Can I Compare Life Insurance Policies?

You can compare life insurance policies and get the best deal with the help of a reputable financial advisor. Most financial advisors, like MoneyExpert, have user-friendly websites where you can request a quote. You will be required to fill out a form by inputting your personal information and the type of policy you are after. Having completed this short form, a broker will contact you and provide information on your options. It is as simple as that.

How Cheap Can A Life Insurance Policy Get?

Although life insurance is an essential product worth having, it shouldn't be expensive, depending on your budget and situation. You can buy this policy for as little as £5 per month. Nevertheless, note that cost is based on varying factors, including:

• The type of policy you want

• The insurance policy term length

• Age of the insurance policyholder

• The amount of cover you need

• Your health status

• Finally, your lifestyle. This has to do with your habits, including smoking.

You can take the financial burden off the shoulders of your family and relatives by getting a life insurance policy.