UK Insurance Guide - Services

Term Life Insurance

Term life insurance is an insurance policy that offers basic cover for a specific period of time usually at low cost . If the policy holder dies within that period, the insurance company pays out a lump sum amount to the beneficiary (or beneficiaries) of the policy holder. However, if the insured survives the period of time, no payment is made and the policy gets expired. It is the most inexpensive and simplest form of life insurance. The biggest advantage of term life insurance is its lower initial cost where the policy holder just has to pay for the death benefit. The insurance holder can take out a term policy for as long as he / she needs it. For example, the insured can terminate the coverage after the graduation of his / her youngest child.


Permanent Life Insurance

Permanent Life Insurance covers for the entire life of the insured. In other words, permanent life insurance could be described as a lifelong protection for people who think they will need a coverage that extends beyond the maximum time period allowed by term life insurance. It guarantees a payout of lump sum in the event of the insured’s death. The insurance company invests an amount of money to build up a cash value that could be used in a variety of ways. The cash could also be used to increase the insured’s retirement income and pay for his / her needs. However, the insurance holder has to pay a higher amount of premium to build up this cash. In this kind of insurance, as long as the policy holder continues to pay the premium, the cover is assured until a death benefit is paid. It is generally used in estate planning as a tool to meet inheritance tax liabilities.