Life Insurance

Guide: Personal Finance

Term assurance

Term assurance is a form of life protection that pays on the death of the person who is assured.

You take out a term assurance policy for a set period of time. The policy only pays out if the person who is assured dies during the term of this policy. If the person assured does not die during the term then nothing is paid out and no future payments are made.

You need to decide what sum you want to insure your life for and how long you want the cover for.

Policies are normally taken out between the ages of 18 and 58. However, there is no upper age limit on age when it comes to taking out a policy and the minimum term of cover is one year.

The premiums you pay are fixed at the outset and if you die before the end of the policy term a lump sum becomes payable.

But you should remember that this policy does not have a cash-in value at any time.

You can apply for cover for yourself or for joint cover for yourself and another person. If you choose joint cover the policy only pays out once on the first occurrence of death.

There are many different types of term assurance and we outline these in more detail in the next chapter.

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