What is term assurance?

Not to be confused with whole of life insurance basically term insurance runs for a specified period of time ie a term such as 10, 15, 20, 25 years or more.

There are many types of term insurance available to suit various needs such as family protection, mortgages inheritance tax cover and so on.

You can have plain level term which means the cover remains level as opposed to increasing or decreasing throughout the term.

You can have decreasing term assurance which means that throughout the term of the plan the amount you will actually be covered for will reduce. These types of plans are generally used for reducing types of liabilities such as IHT planning or loans etc.

There is is Convertible term assurance this type of plan gives you the opportunity to convert the plan free of any medical checks into a whole of life insurance plan at a later date as long as it is still within the term of the plan.

Renewable term assurance is also available this is were you get a term plan for say 10 years and during the life of the plan you have the option to renew the plan for a further 10 years without any medical checks. This type of term assurance along with Convertible term is always a little more expensive than ordinary term as the life company is taking the added risk that your health may deteriorate in the future and they are still going to cover you regardless on the renewal or conversion.

On all of these plans with the obvious exception of decreasing term assurance you can have the indexation option giving you increasing term. The indexation option does diff3er slightly from life insurance company to life insurance company but the principle is broadly the same. They agree to increase the sum insured, which in turn increases the premium, in line with either the average earnings index (the index that tracks pay rises across the country) or the retail prices index (the index that tracks inflation on a list of every day goods in the shop). This should ensure that the level of cover keeps pace with the costs of things into the future and ensures that it does not diminish in its buying power.

In addition you can also select a benefit called waiver of premium. For more information about this benefit please click on the link on the left.