Types of Life Assurance Policies

Just like shopping for mobile phones or personal loans take time and can be confusing, the same is true for life assurance policies. In fact, choosing for a policy is much more difficult because of what's at stake. To avoid making mistakes and ensure that your investment type is right for your needs and your family, prior research is necessary.
When researching, one of the things to dig deeper on is the different types of policies offered in the market. You have to do this if you don't want to pay too much for a policy that doesn't fit your circumstance and needs. Knowing the different types is also the key to finding and choosing the best policy for you.
There are basically two common types of cover in the UK today. They are the term life insurance or also known as term assurance and then there's whole of life insurance.

Term Assurance

Term assurance is the simplest type of life assurance. It gives your family protection for a given period of time wherein your family receives a lump sum if you die within the chosen period. It is also the cheapest and by far the most popular option among policy holders.
With term assurance, there is no guarantee that a lump sum will be paid out. Say the term ended before you die, your beneficiaries will not receive any benefits. This is primarily why it's also cheap. For someone who is aged 30, life assurance will cost significantly less than for someone aged 50 or above.

Whole of Life Insurance

If term assurance pays a lump sum for a chosen period of time, whole of life insurance is a different story altogether. By contrast, this type offers more protection because it covers your whole lifetime hence more expensive. As long as you pay the premiums continuously, your beneficiaries are guaranteed a lump sum after death.
With whole of life insurance, your premium payments do two things. It buys a life cover and it invests on a reserve. As your investment grows, it subsidizes the cost of insurance as you grow old hence the whole of your life provision.
Under whole of life insurance, there are still various forms to check into and they include:
1. Not-profit whole life
For this type, you pay a fixed premium per month which is payable throughout life. When the policy holder dies, a fixed lump sum is paid out to the family. Without the aspect of investment, not-profit whole life is similar to term assurance.

2. Without profit whole life
For the without profit whole life, the policy holder's beneficiaries will be paid out the assured lump sum including the profits that have been accrued over time.
3. Low cost whole life
For low cost whole life, it is guaranteed that your family will be paid out an amount that is greater than the total sum in addition bonuses. Said sum will be paid upon the policy holder's death.
4. Over 50 plans

For this type of plans, the amount assure smaller than other policies. This option is availed if you only want to cover the funeral and related expenses. Just like other forms of whole life insurance, the premiums are guaranteed for life and it can be between £500 and £2,000.