Finding the right life insurance policy may seem like a daunting prospect and is often a difficult subject to think about. However, having the right policy in place could help towards providing essential financial protection and security for your family during a vulnerable time. By doing the groundwork now, you can help make plans for those dearest to you should the worst happen.

Here at Tesco Compare, we want to help make this process as simple and easy as possible. In this section we look at different types of cover and how they could benefit you.

Single or Joint?
You can take out either a single or joint life insurance policy. A single policy would cover you only, whereas a joint policy would cover both you and your partner. Joint policies will usually pay out on a first death basis. This means that a pay out is made on the first death in the partnership. After this, the remaining partner would no longer be covered by the policy. The terms and premiums attached to single and joint life insurance policies can differ between providers. Therefore, if you’re considering a joint policy, it may also be worth considering two single life policies.

Assurance or Insurance?
When looking around for cover you’ll see both of these terms used by different providers. The term ‘assurance’ is used because it assures an event that’s certain to happen and death is seen as an assured occurrence. ‘Insurance’ implies that there’s only a risk of something happening. However, the term ‘insurance’ is commonly used as it’s not certain that you’ll die within the set term of your policy. They don’t mean different things in terms of your policy cover.

Level Term Insurance involves a set amount of money that is paid out as a lump sum should you die within a specified fixed term. E.g. 20 years. This amount does not change. If a claim is made and the sum assured is paid out - the policy ceases. If you survive your term, the policy ceases and no pay-out is made.

This policy can be set up as either a single life or as a joint life first death policy. For an increased premium you can add critical illness cover to most Level Term Insurance policies.

Decreasing Term Insurance / Mortgage Insurance
This is designed to go towards paying off your mortgage if you die within your set term. The pay out amount decreases as your mortgage decreases, so you are only paying for the life cover you require. It’s worth noting that, although designed to go down in line with the mortgage balance, some policies may not guarantee to cover the mortgage if interest rates were to rise excessively. Also, if life cover is purchased to protect a mortgage then the lender may require the policy to be assigned.

This policy can be set on either a single or joint basis. The cash lump sum will be paid out on the first claim only. For an increased premium you can add critical illness cover to most Mortgage Insurance policies.

Critical Illness Cover
This pays out a lump sum upon the diagnosis of a qualifying critical illness (for which there is no life expectancy criteria). The illnesses that qualify for a pay-out will be specified by your policy provider –it’s a good idea to check these specifications before purchasing your policy. Critical illness cover is usually an additional purchase and can be added to Level Term or Mortgage Insurance. The Critical Illness cover can be set up on a single or joint life basis and you decide on the amount of cover and the length of the policy.

Terminal Illness Cover
Some policies may include Terminal Illness cover. With this cover, the lump sum is paid out early on diagnosis of a terminal illness. This allows you to make financial arrangements for your dependents whilst you are still alive. It’s worth checking whether terminal illness cover is definitely included in your chosen policy and confirming the conditions that apply.

Life Insurance Written In Trust
If your life insurance policy is written in trust then, in the event of a claim, your insurance provider will pay out directly to the beneficiaries named on your policy. This means that the proceeds should not form part of your estate and therefore will not normally be subject to Inheritance Tax. Many insurance providers provide documentation for placing policies in trust. However, if you’re unsure whether a trust is suitable, it’s usually best to seek specialist advice.

Please note that neither Tesco Compare nor The Idol offers advice, so please ensure that any policy you apply for meets your needs. If you require advice we recommend that you contact an independent financial adviser.