Summary
There are various categories of cheap life insurance cover available in the market. Many people are now benefiting from lower monthly premiums by moving to pension term assurance (PTA) because of the tax benefits on the cost of this type of insurnace plan. It is not, however, suitable for everyone.

Recently it was revealed that the cost of life insurance plans has fallen big style in recent years. So what type of insurance plan is most suitable for you?

Term plans are the simplest typeof life insurance - you pay a monthly premium for a set value of cheap life insurance for a fixed term that the policy will run for. If you die, it then pays out a lump sum.  If the plan terminates and you have survived, no money is paid out.

There are several categories of term insurance: “level” term is where the payout is a fixed amount; “decreasing” term, which is often much cheaper because the sum to be paid out decreases each year. Normally this sort of insurance policy is taken out to protect a mortgage.

There is also “increasing” term insurance where the insured sum increases annually in line with inflation; this can be an excellent way of protecting your coveragainst inflation.

Joint life plans are very benefitial for couples who require both of their incomes to help pay the mortgage because a payout is made if either policyholder were to die.

Family Income Benefit offers the policyholder’s beneficiaries a monthly income from from the date the policyholder dies until the policy ends rather than paying out one large lump sum.

The value of insurance you need will depend on your own individual position. Most large and medium-sized organisations offer a death in service benefit which can usually payout up to 4 times to your partner if you die whilst being employed. Hence if you are reasonably confident about remaining in employment, you may conclude that paying for more life insurance with another plan was not required.

The cost of life cover depends on a number of factors, namely the length of the policy’s term, the type of policy and certain medical criteria, and certain medical criteria - whether you are over-weight or whether you smoke. Insurers are also pushing up premiums for those policy holders who are over-weight.

There are big advantages to moving to pension term insurance. If you already have a term insurance policy which pays out a l;arge tax free lump sum, you can make big savings on  your premiums by switching to a pension term cover. The reason is because under new pension laws, most customers qualify for tax relief on the money they pay for their life cover if they opt for a pension term assurance (PTA) policy. This sort of insurance is basically the same as standard term insurance in so far as it is still protection-only. So it pays out if you passed away within the insured period but if you live to the end of the insured period, nothing is paid out.

Not everyone stands to benefit from switching to PTA, however. For example, if you purchased your life insurance a long time ago, the larger premiums that you may now have to pay owing to the increase in your agecould well outweigh the benefit of tax relief. Similarly, if your health has worsened since you purchased your policy, you will probably be better off remaining with your current insurance plan.