This is the simplest form of life assurance and is a protection
policy that pays out a lump sum if you die at any time during
the term of the policy. No amount will be payable to you at the
end of the policy term if you survive. You decide at the outset
how many years you want the policy to run. It may be you decide
to take out term assurance for a particular period of time, to
protect your family while your children are growing up.
Term assurance provides a choice of policy types:
Level term assurance - You decide at the outset
the amount of cover you need and how long you want the policy
to run. This amount of cover will then remain level throughout
the term of the policy and so too will the premiums. This type
of cover is often also used in conjunction with an "interest
only" mortgage.
Increasing term assurance - The amount of life
assurance and the premium you pay increase each year, usually
this is in line with inflation and ensures a realistic level of
protection is maintained for your dependants.
Convertible term assurance - During the term
of the policy, you have the option to convert your policy to a
Whole Life policy or Endowment plan without the need to give additional
medical evidence of your health. This option will be a little
more expensive than a standard level term assurance policy and
may be a helpful option if your health is likely to deteriorate
over time.
Family income benefit - This type of policy
provides a guaranteed income for your dependants instead of a
lump sum, if you die during the term of the policy. This income
is then payable until the original expiry date of your policy.
Your premiums will remain the same throughout the policy.
