Life insurance FAQs
Here you'll find some FAQs to jumpstart your research on the best life insurance for you.
Whatever policy you decide on, ensure you read its terms and conditions to make sure you know what you're covered for. And remember to review your policy if your personal circumstances change to check whether it's still right for you.
Frequently asked questions
What is the difference between term life insurance and whole life insurance?
You can read a detailed explanation of each type , but the short version is that with term life, you're covered for a fixed term (such as 15 to 20 years), whereas with whole life, you're covered for the rest of your life. If you stop paying your premiums, your life cover will end and you will not be covered. Both policies are subject to terms and conditions.
What is investment-type life insurance?
Investment-type life insurance policies are slightly different, as they depend on how well the investments in the insurance fund have performed over time and are therefore inherently more risky than straightforward life insurance policies.
It’s important to get financial advice before taking out this type of policy.
Are there different kinds of term life insurance?
Yes. Term life insurance cover comes in a variety of forms, but essentially you’re insured for a specific period, such as 15 or 20 years. The policy pays out a lump sum if you die within the term, so you’ll get nothing if you live for longer.
The different types of term life insurance and their features include the following but companies may not sell them all:
- Level term: The premium and level of life insurance cover stays the same throughout the term.
- Decreasing term: The level of life cover reduces over time. This type of life insurance policy is often taken out to cover mortgages or other loans where the amount owed decreases year on year. The aim is that if you die the outstanding loan can be paid off.
- Family income benefit: This type of term life insurance pays a regular income rather than a lump sum.
- Increasing term: The cover and premium rise over the years.
You may also see decreasing term insurance called mortgage term insurance or mortgage protection life cover or insurance.
Policies can be taken out for a single life or couples can take one out together. If you do take out a joint policy, it will usually only pay on the first death during the term.
What is the difference between life insurance and life assurance?
The terms 'insurance' and 'assurance' are sometimes confused – life insurance is a more popular term. The term 'assurance' is the provision of cover for an event that will definitely happen but insurance is cover for an event that might happen.
Why is life insurance so important?
Generally, people take out life insurance because they wish to provide cover in the event of their death for their loved ones – this could be to pay off a mortgage or perhaps they are the sole breadwinner and wish to provide a fixed income or lump sum for their family and dependents.
How much does life insurance pay out?
That's up to you. Barclays Life Insurance from Aviva can provide life cover up to £500,000. The minimum sum insured is based on the minimum premium of £6 per month. You decide how much you want to get cover for and what type of life insurance you’d like.