Personal Insurance

A level-term policy pays out a lump sum if you die within the specified term. The amount you're covered for remains level throughout the term. The monthly or annual premiums you pay usually stay the same, too.

Level-term plan is a very good option for family protection, where you want to leave a lump sum that your family can invest to live on in the event of death. This type of plan is also selected when you need a specified amount of cover for a certain length of time, e.g. to cover an interest-only mortgage.

With a decreasing-term policy, the amount you're covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgages.

Premiums are usually significantly cheaper than those for level-term life cover as the amount insured reduces over the period of the term. Some decreasing-term insurance policies can also be used for inheritance tax planning purposes.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.

Family income benefit life insurance is a type of decreasing term policy. In the event of death, it pays out a regular income to your beneficiaries till the policy expires.

The upside of family income benefit is that it's easier to work out how much you need. For example, if you take home £2,000 a month, you can arrange for the same amount to be paid out to your family till the end of the selected plan term.

Whole of life plans pay your family a guaranteed cash lump sum in the event of your death. This type of life assurance is more expensive than term assurance because the claim is inevitable.

If you think your estate will have to pay inheritance tax (IHT) when you die, you could set up a whole-of-life insurance policy to cover the tax due, meaning that more is passed to your beneficiaries. To ensure the proceeds of the life insurance policy are not included in your estate, though, it is vital that the policy be written in trust. Such plans are also considered to protect funeral expense.