Life Insurance in the UK
A quick comparison between term policies and whole-of-life policies.
Marketing life insurance in the UK has become a black art, with a complicated variation of products to entice the weary consumer. But in short, remember that term insurance is genuinely insurance, and whole of life policies are investments- and they generally do more but cost more.
Life insurance in the UK is a complicated business because the different types of insurance are regulated in different ways, mean different things, and are fundamentally different products.
Term insurance really is insurance- just like car insurance, you get something back if something goes wrong (of course with life insurance, that means terminally wrong…); and only if it goes wrong during the term covered.
But what is strictly called life “assurance” (and these days you’ll find the terms used interchangeably) is entirely different- it’s a savings product such that you fill a pot until you die.
James Carlyle, in the (excellent) Motley Fool 60 Second Guide to Life Insurance, puts it well: “Whenever you hear words like 'endowment', 'unit-linked', 'with profits' or 'bond', then you know that someone is trying to sell you an investment product rather than a straightforward insurance policy. And, if you want an investment, then get an investment! Don't get it mixed up with insurance”
So life insurance in the UK covers a multitude of sins- perhaps a savings option is just right for you (certainly term insurance policies have no value once they expire) but don’t be blinded by bogus terminology- get the product that’s right for you.
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