There are four main types of life insurance, or life assurance, as it should more properly be called. Technically speaking, assurance protects you from something that definitely will happen, but you're not sure when, and insurance protects you from something that may happen, but equally may not happen.
Level term assurance will pay out a set amount of money if you die, and sometimes, depending on the policy, if you are unable to work because of sickness or accident. The 'term' refers to the fact that the policy has a time limit, and if you are still alive at the end of that term, you don't get any money.
Mortgage protection decreasing term assurance (or MPDA) describes a policy that covers a repayment mortgage (as opposed to an interest-only mortgage). Because the capital amount owing on the mortgage decrease over the life of the mortgage, so does the amount of cover. So the longer it goes on, the less it will pay out.
Whole of life policies will pay out a lump sum on death, and they are not restricted by a term. There are many different variations, some come with a savings element, many have a set amount that pays out whereas others will increase the payout as time goes on so that it increases with inflation ('with profits' policies).
This is a complex area and it is essential to obtain qualified advice before entering into any insurance policies.
Level term assurance will pay out a set amount of money if you die, and sometimes, depending on the policy, if you are unable to work because of sickness or accident. The 'term' refers to the fact that the policy has a time limit, and if you are still alive at the end of that term, you don't get any money.
Mortgage protection decreasing term assurance (or MPDA) describes a policy that covers a repayment mortgage (as opposed to an interest-only mortgage). Because the capital amount owing on the mortgage decrease over the life of the mortgage, so does the amount of cover. So the longer it goes on, the less it will pay out.
Whole of life policies will pay out a lump sum on death, and they are not restricted by a term. There are many different variations, some come with a savings element, many have a set amount that pays out whereas others will increase the payout as time goes on so that it increases with inflation ('with profits' policies).
This is a complex area and it is essential to obtain qualified advice before entering into any insurance policies.