answered 2 years ago
Well, the short answer is that you may need all of these, or you may need none of these. The only way to know is to ask the 'what if' question - What if I died? - and to look at the financial consequences. The appropriate solution (or solutions) are those that meet the identified needs. Here are some pointers:
If I died, would I leave a mortgage? If the answer is yes, then you would need a decreasing term insurance to cover a repayment mortgage, or a level term insurance if you have an interest-only mortgage. The right term to choose would be the remaining duration of your mortgage loan.
If I died, would my wife/child need funds for their maintenance? If this answer is yes, then an increasing term insurance would be suitable. In this case the increase is to maintain the purchasing power against future inflation, and the term is for as long as the need is expected to last: I normally suggest up to the age of 21 for the youngest dependent, but you might wish to provide longer-term income for your wife.
Although a lump-sum might be useful, it is worth considering an inflation-linked family income benefit. This is technically a reducing term insurance, which will pay a monthly amount, tax-free under current rules, from the date of claim until the end of the policy term. It is a reducing policy because, as time passes, the total amount potentially payable by the insurance company will reduce (as it will be paid for a shorter time). It can be inflation linked, with benefits (as well as premiums) increasing each year until a claim is made.
The policy you are least likely to need is a whole of life policy, which is mainly used to meet an eventual inheritance tax liability. In that case you might select a joint policy with your life, payable when the second of you dies, equal to your anticipated inheritance tax liability.
This is a very brief run-down. It would be sensible to consider such things as critical illness insurance and long-term sick pay (permanent health insurance) as well, perhaps, as private medical insurance. Insurance is never really cheap, though with your state of health and age you should be able to obtain really competitive rates. As I have said on other answers, do take into account any employer benefits such as death in service payments, and widows/dependents pensions, and make use of independent advice.