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What is the best type of life insurance for me?

What is the best type of life insurance for me - text transcript

published: 27 September 2022
Read time: 5 minutes

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Life insurance provides financial help for the ones you love when you’re gone, but it can work in different ways depending if you take out a decreasing term or level term policy.

A level term life insurance policy pays out a set amount, regardless of when you pass away.

But the pay-out for a decreasing term life insurance policy goes down as time goes on.

You might be wondering why you would ned a pay-out that goes down over time. It’s usually taken out to cover a specific debt, like a mortgage. So your dependents can use the pay-out to cover the rest of the mortgage payments. The amount you owe on your mortgage should decrease over time, so the pay-out you’ll need should also go down. And although the amount you pay each month will stay the same, the decreasing payout means these policies are usually cheaper.

A level term policy pays out the same amount for the whole time you’re insured. So you might choose this if you want to leave money behind to help with living costs or expenses like tuition fees. The guaranteed full pay-put means you’ll usually pay more in premiums for level term cover.

So which type of life insurance should you get?

Think about the pay out you want to leave your loved ones. If it’s to pay off an outstanding debt like a mortgage, a s decreasing term policy might be for you. But if you want to leave behind a bigger lump sum, you might prefer level term cover.