Term Assurance

Term Assurance

Term assurance is the cheapest and simplest form of life insurance. The client chooses the amount of time the insurance will run for and the amount of cover.

It doses not contain any investment element – it simply promises to pay out if you die within the term.

This type of insurance is the most cost effective way of protecting a mortgage or families lifestyle while the children are dependant.

Term policies can be level or decreasing.

A level policy simply means the sum assured remains level throughout the term of the policy; if you die on the first day or near the end of the policy you get exactly the same amount back.

A decreasing policy will initially be cheaper per month but while the monthly cost will not reduce the amount of cover will. This is most often used to protect repayment mortgages because you start off owing a large sum of money which is reducing as you pay off the debt.

The benefit is paid tax free, but maybe liable to Inheritance Tax so careful planning is essential.

The benefit is normally paid as a lump sum but can be paid as a tax free income depending on how the policy is set up.

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