Guide to Life Insurance

Term insurance

Term insurance is where cover is provided for a fixed term, usually 10, 15 or 20 years. The sum assured will only be payable on death, with no investment benefits or payment on survival. It is important to understand this concept.

Should you survive past the end of the term, you will not receive any payment as your policy will have expired. Should you stop paying the premiums at any time, cover will stop, and there is no surrender value. This is unless you pay extra on your premiums to have a waiver of premium so you can get a break from premiums should you lose your job.

Within Term Insurance there are other choices which you can make to tailor your policy to suit you and your requirements.

You may be required
to attend a medical in order for your insurance policy to commence.

Type of Term Insurance	What does that mean?	Comments
Level Term	Premiums are set at an agreed level and do not increase or decrease. The same applies to the sum assured, it remains the same throughout the term.	This plan is great from the budgeting point of view, but its main downfall is that it does not allow for inflation.
Increasing Term	This fixed term policy increases the sum assured by either a set percentage or by the Retail Price Index throughout the term.	Whenever there is an increase in the sum assured there is an increase in the monthly premiums.
Decreasing Term	The sum assured decreases over time, hence premiums also reduce.	This policy is commonly used in conjunction with a mortgage, it is designed to pay off the outstanding amount in the event of death.
Renewable Term	The term tends to be for a shorter period ie 5 years, and can be renewed without any further medical evidence.	The sum assured cannot be increased, although premiums will increase with age.
Convertible Term	Provides the option to convert some parts of the insurance to whole of life policy without any further medical evidence required.	Even if the insured person develops a health issue, the policy can still be renewed and benefit unaffected, also provides flexibility to upgrade to a whole of life policy later.
Family Income Benefit	A tax free regular income will be paid to the beneficiary, as opposed to a lump sum.	The regular income is paid from the date of the death of the insured until the end of the term.

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Guide Contents

What is life insurance?
The different types of life insurance cover
Term insurance
Whole life insurance
Shopping around for life insurance UK
Apply for life insurance
Make a claim
Life insurance FAQ
Where to get more life insurance help

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