Term Assurance

Published / Last Updated on 14/06/2015

Term AssuranceTerm Assurance

Factfile: Term Assurance

Brief Description:

Term Assurance is one of the cheapest forms of life cover available. This is because it is taken out for a specific length of time (the term), for a specific amount of cover and, if the person survives to the end of the term, the policy will end and have no value. There are two main types of Term Assurance, Level Term Assurance and Decreasing Term Assurance (sometimes called Mortgage Protection). There are many variations and additional options to these two basic types of policy.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: Yes

Critical Illness Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover:  Fixed Term

Increase Cover option: Yes, normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: No

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

  • Private policies - Benefits are tax free
  • Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Yes

Suitable For:

  • Children
  • Adults
  • Family Protection
  • Mortgage Protection
  • Inheritance Tax Planning
  • Business Protection

Insolvency Compensation Limits:

Insurance Company Funds - 90% of total funds invested. No Limit.

For more on term assurance contact us.

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1. Level Term Assurance

Factfile: Level Term Assurance

Brief Description:

This is the simplest form of Term Assurance and provides a fixed amount of life cover (known as the sum assured) for a fixed number of years.  If the person or people covered by the policy (known as the life or lives assured) survive to the end of the term, the policy will end and have no value.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: Yes - Level, fixed sum assured

Critical Illness Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover: Fixed Term

Increase Cover option: Yes, normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: Yes

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

  • Private policies - Benefits are tax free
  • Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Yes

Suitable For:

  • Children
  • Adults
  • Family Protection
  • Mortgage Protection
  • Inheritance Tax Planning
  • Business Protection

Insolvency Compensation Limits:

Insurance Company Funds - 90% of total funds invested. No Limit.

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2. Mortgage Protection And Decreasing Term AssuranceLevel Term Assurance

Factfile: Decreasing Term Assurance (Mortgage Protection MTA and MTDA)

Normally used for mortgage protection for repayment mortgages.

Brief Description:

This type of Term Assurance is designed so that the level of cover decreases over the term of the policy, with no cover or value at the end of the term.  This is the cheapest form of life cover and can be used in connection with loans or mortgages which decrease to nil at the end of the term.  At the end of the term the policy will end and have no value.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: Yes - reducing, decreasing sum assured

Critical Illness Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover: Fixed Term

Increase Cover option: No

Decrease Cover option: Yes

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

  • Private policies - Benefits are tax free
  • Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Yes

Suitable For:

  • Children
  • Adults
  • Mortgage Protection
  • Inheritance Tax Planning - but only in some reducing liability cases such as gift inter vivos
  • Business Protection - but only in connection with loan financing 

Insolvency Compensation Limits:  Insurance Company Funds - 90% of total funds invested. No Limit. 

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3. Convertible Term Life AssuranceConvertible Term Assurance

Factfile: Convertible Term Assurance CTA

Brief Description:

This life cover is virtually the same as Level Term Assurance but it also carries the right to convert it to a permanent whole of life policy or maybe another Term Assurance or endowment life policy during the term of the policy.  No further medical evidence will be necessary. This cover is slightly more expensive than Level Term Assurance. It provides a fixed amount of life cover (known as the sum assured) for a fixed number of years. If the person or people covered by the policy (known as the life or lives assured) survive to the end of the term, the policy will end and have no value. You have the option to convert policy before the end of the term.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: Yes - Level, fixed sum assured.  Can be converted into a whole of life policy or endowment without medical evidence subject to policy terms

Critical Illness Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover: Fixed Term (unless converted)

Increase Cover option: Yes, normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: Yes

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

  • Private policies - Benefits are tax free
  • Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Yes

Suitable For:

  • Children
  • Adults
  • Family Protection
  • Mortgage Protection
  • Inheritance Tax Planning
  • Business Protection

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested. No Limit.

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4. Increasing Life Term Assurance

Factfile: Increasing Life Term Assurance

Brief Description:

This form of Term Assurance is capable of having the sum assured increased during the term of the policy without any further medical evidence.  The premiums may be level or may increase as the sum assured increases. This cover is slightly more expensive than Level Term Assurance. It provides an increasing amount of life cover (known as the sum assured) for a fixed number of years.  If the person or people covered by the policy (known as the life or lives assured) survive to the end of the term, the policy will end and have no value.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes, can be fixed or increase at set amounts

Reviewable Premiums Available: Yes

Life Insurance included: Yes - Increasing sum assured

Critical Illness Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover: Fixed Term

Increase Cover option: Yes, automatically with no medical evidence for the normal increases.  Higher increases over and above the normal increases, medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: Yes

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

  • Private policies - Benefits are tax free
  • Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Yes

Suitable For:

  • Children
  • Adults
  • Family Protection
  • Mortgage Protection
  • Inheritance Tax Planning
  • Business Protection

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested. No Limit.

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5. Renewable Term AssuranceGet Up to Date Rates

Factfile: Renewable Term Assurance

Brief Description:

This form of Term Assurance can be renewed at the end of the original term, without further medical evidence. The renewable option can be used with Level Term Assurance, Convertible Term Life Assurance and Increasing Life Term Assurance policies.  It provides a fixed amount of life cover (known as the sum assured) for a fixed number of years. If the person or people covered by the policy (known as the life or lives assured) survive to the end of the term, the policy will end unless renewed and have no value.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: Yes - Level, fixed sum assured

Critical Illness Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover: Fixed Term but can be renewed without medical evidence.  Premiums will increase at renewal. 

Increase Cover option: Yes, normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: Yes

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

  • Private policies - Benefits are tax free
  • Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Yes

Suitable For:

  • Children
  • Adults
  • Family Protection
  • Mortgage Protection
  • Inheritance Tax Planning
  • Business Protection

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested. No Limit.

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6. Family Income Plan: Protection and Insurance Advice

Factfile
: Family Income Benefit FIB

Brief Description:

This variation of a Term Assurance can be set up on either an increasing or decreasing basis. Instead of a lump sum of money paid in the event of death, Family Income Benefit pays out the sum assured as a series of income payments. The term of the policy and the level of the income payments are selected at outset. With the decreasing option, the longer the life assured survives into the policy, the lower the overall income payments will be. With the increasing option, the income payments increase, either throughout the term or when the income becomes payable. Premiums may be fixed or may increase. The cost for increasing will be higher than decreasing. If the person or people covered by the policy (known as the life or lives assured) survive to the end of the term, the policy will end and have no value.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Life Insurance included: Yes - sum assured, paid as a monthly amount

Critical Illness Insurance included: Can rarely be added as an option

Income Protection Insurance included: No - This is not an income protection policy - it is a regular amount life insurance policy

Period of Cover: Fixed Term

Increase Cover option: Yes, normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: Yes

Waiver of Premium option: Yes

Lump sum pay out: No

Regular amount pay out: Yes

Any investment cash in value: No

Tax Benefits:

Private policies - Benefits are tax free

Suitable For:

  • Adults
  • Family Protection
  • Mortgage Protection

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested. No Limit.


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