Term life insurance is a standard form of life insurance policy, providing cover for a set period. As one of the cheaper types of policy, it offers protection at an affordable cost. Learn how it works and the types of cover available for you and your loved ones.

How does term life insurance work?

With Term life insurance, you are covered for a specified length of time, known as the policy term. The length of your policy is agreed upon with your insurance provider when taking out a policy.

Once you take out cover, you will need to start paying monthly premiums. If you stop paying your premiums for any reason, you will no longer receive cover.

When you die a cash lump sum is paid out to your family - so long as you die within the policy term. If you survive the policy term (which we hope so!) you will no longer be covered or receive any compensation for the premiums paid.

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Types of term life insurance?

With most insurance providers, Term life insurance comes in three forms of cover:

  • Level term life insurance - This is the standard type of term life insurance, of which the pay-out amount is fixed throughout the policy term. 
     

  • Increasing term life insurance - The policy pay-out increases over time in order to try and offset the effects of inflation. As the payout amount increases, so too do your premiums.
     

  • Decreasing term life insurance - Typically used to cover a large debt, such as a mortgage. The payout decreases over the policy term - usually by a fixed percentage stated when you take out the policy. 

Term life insurance works differently from whole life insurance - which provides cover for the remainder of your life as opposed to a specific policy term. If you’re struggling to decide between term life insurance and whole life insurance, check out this helpful article - Whole And Term Life Insurance: Which Is Better?

What can term life insurance cover?

The pay-out from a term life insurance policy can benefit your family with financial support during what is already a difficult time. Depending on the type of cover you opt into, the pay-out can be used to pay towards things such as:

Ultimately the amount of cover you need reflects on you and your family's circumstances. If you are unsure about how much cover you might need, then consider speaking to one of our expert advisers. They will be able to work through your protection needs and make recommendations tailored to your current situation.

How much is term life insurance?

Generally, term life insurance is an affordable option for life insurance, though there are several factors that are used to determine the cost of your policy. Usually, when taking out a life insurance policy, your insurance provider will ask you some basic questions about your health and lifestyle. These questions are usually regarding your:

They will also ask you about the amount of cover you need as well as the length of cover you require. With life insurance, it’s best to take out cover when you are young to avoid a rise in cost later down the line.

It’s important to answer all of these questions 100% openly and honestly. s. If not, your policy could be voided and you’ll lose money on the premiums already paid.

Where can I buy term life insurance?

If you’re looking to buy a term life insurance policy, why not use an experienced advisory broker like Cavendish Online. Our expert team can help you find the right policy for you and your family at an affordable price.

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