There are a few main types of Life Insurance, and the right option depends on what you’re trying to protect and how long you need cover for.
- Level Term — the payout stays the same throughout the policy term. Often used to protect family income or an interest-only mortgage.
- Decreasing Term — the payout reduces over time (usually in line with a repayment mortgage balance). Typically the most cost-effective option for mortgage protection.
- Increasing Term — the payout increases over time (often linked to inflation). This can help maintain the value of cover, but premiums usually rise too.
- Whole of Life — covers you for your entire life (as long as premiums are paid). Often used for inheritance planning or funeral costs, but it can be more expensive than term cover.
The most common choice for homeowners is term insurance, where you choose a length of cover (for example, 25 or 30 years) to match your mortgage term or the years your family depends on your income.