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Term Assurance

Term Assurance is a life insurance policy which covers the life of a person in monetary terms in return for a payment, usually monthly, and known as a premium.

Term assurance is the cheapest and simplest form of life cover, providing life assurance for a fixed term only.

The sum assured is payable only if the life assured dies within that term.

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There is no investment value to the policy at any time.

In the case of Level Term Assurance the sum assured does not change during the term of the policy. Policies are generally used to repay a loan on the death of the borrower (the life assured). Level Term Assurance is most suitable when the loan has a fixed capital value that remains unchanged throughout its term.

Decreasing Term Assurance indicates that the sum assured decreases over the term of the policy. This is commonly used to protect a capital & interest repayment mortgage, where the outstanding balance reduces during the life of the borrowing.

Policies can cover a single life or be on a joint life basis.

Critical illness cover is a common additional benefit that can be added to a Life assurance policy. The sum assured is payable on the conclusive diagnosis of a critical illness, such as cancer, a heart attack, multiple sclerosis or a stroke.

(Nowadays policy premiums usually vary depending on whether or not the proposor is a smoker or non-smoker. A non-smoker is generally defined as someone who has not smoked cigarettes in the last 12 months. Cigar and pipe smokers are sometimes classed as non-smokers. The rates will also vary for male / female.)

Related links:

• Compare Life Insurance