Life Assurance

How would your family or business cope financially if you should die early? Life assurance is the answer. It provides financial protection to help your family or business to manage after your death. The peace of mind which life assurance brings helps you to formulate clear plans for the future.

Life Assurance as Protection - Term assurance

Term assurance (also known as "temporary insurance") provides financial protection if you die within a specified period known as "the term". This period might be 10, 15 or 20 years although you can arrange policies to cover you for periods as short as one month. If you are alive at the end of the term no payment is made.

Term assurance is the cheapest form of protection. For just a few pounds a month your dependants or business colleagues can be covered for several thousands of pounds.

There are three main types of term assurance:

1. Decreasing Term - The sum assured reduces by a fixed amount each year, decreasing to nil at the end of the term. These policies are usually used to cover a mortgage or other loan and they are designed to pay any outstanding loan repayment if you die early. Remember, though, at the end of the term nothing is payable.
2. Increasing Term - The sum assured increases each year by a fixed percentage of the original sum assured. These policies are designed to increase your insurance protection as your earnings increase or against inflation.
3. Family Income Benefit - If you die during the term of the policy a regular income is paid to your dependants for the rest of the term. The income can be paid monthly, quarterly or yearly. Some policies provide an income which increases each year at a fixed rate - say by 3% or 5%.