Life insurance
Three different jobs, three different policies.
Life insurance is not one product. It is a handful of separate jobs, and the right policy depends entirely on which job you need doing. Here is what each one is actually for.
01 · Term life
If my income stopped, could they carry on?
Cover for a fixed number of years that pays a lump sum if you die during that time. It is the cheapest way to buy a large amount of protection, which is why it is where most families start.
Who it tends to suit
- Anyone with a mortgage, young children, or a partner who could not carry the bills alone.
- People whose cover through work would disappear the day the job did.
Worth knowing
- A common starting point is enough to clear the mortgage and replace your income until the youngest child is independent.
- Level term keeps the premium the same for the whole term, so it does not creep up as you age.
- Many policies can be converted to permanent cover later without a new medical, which matters if your health changes.
- If you outlive the term, nothing is paid out. That is the trade you make for the price.
02 · Mortgage protection
Could they stay in the house?
Life cover built around your mortgage, sized to the balance and the years you have left on it. Most people buy it in the first year or two after moving in, usually because a letter arrived.
Who it tends to suit
- New homeowners, and anyone who took a mortgage on jointly.
- People who want one clear job done rather than a general policy they have to reason about.
Worth knowing
- The money goes to your beneficiary, not to the lender. They can clear the mortgage or use it however makes most sense at the time.
- It can be written to decrease alongside the balance, or held level so anything left over stays with the family.
- Riders for disability or critical illness are often available, and are frequently the part that gets used.
- You are not obliged to buy this through your lender, and those letters after you move in are usually from a marketing firm rather than the bank.
03 · Final expense
Who pays for the funeral?
Smaller whole-life cover aimed at the immediate costs rather than long-term income. Small enough to be affordable on a fixed income, large enough that nobody is fundraising in the week after you die.
Who it tends to suit
- Older applicants, where term cover has become expensive or is no longer available.
- Anyone whose children are grown and whose mortgage is gone, so the big policy is no longer the point.
Worth knowing
- Underwriting is simplified, and many policies need no medical exam at all.
- Premiums are fixed for life and the cover does not expire, so it cannot run out at the point you need it.
- Some policies pay a reduced benefit if death occurs in the first couple of years. Whether yours does is one of the first things to check.
- Funeral costs vary widely by region and by what a family chooses, so the right amount is worth working out rather than guessing.
The descriptions above are general information about how these types of policy usually work. Products, features, riders, exclusions, underwriting and availability vary by state, by carrier and by individual, and every application is subject to approval. Nothing here is a quote, an offer of cover, or advice about what is right for you, and no policy exists until a carrier issues one. Your own circumstances should be discussed with a licensed agent before you decide anything.
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Not sure which one you need?
That is the normal starting point. Tell us who you are protecting and we will work out which of these actually fits, and how much of it.