Home / Healthy finances / Life insurance / Term assurance

Term life assurance

Similar to other kinds of cover, Term Life Assurance cover is not the same as Life insurance or Life Cover. Term Life Assurance does not accumulate cash value and it is generally considered to be pure cover ? where the policyholder's premium purchases protection in the event of death and nothing else. No bonuses to be paid or lump sum to be received after a certain number of years ? just pure cover.

The three factors to be considered when buying Term Life Assurance are the face amount, i.e. the amount of cash to be paid out on the event of the policyholder's death, the premium to be paid and the length of the policy. Various companies sell these policies with different combinations of the three factors. The face amount can remain constant or go down, the length of the policy can be for one or more years, or the premium can remain level or decrease. One common form of these types of policies is the annual renewable policy. This is where the provider of the cover guarantees to offer a policy every year that is equal to, or less than the original document without regard to the policyholder's insurability.

Having the peace of mind that your policy is guaranteed renewable can be extremely valuable to the customer. It means that if the policyholder becomes a great risk and, under normal circumstances, wouldn't even be considered for a policy then there is still the original cover as a safety net. One form that is more widely used than annual renewable is the level term. This is where the premium remains constant over a set number of years, most commonly 15, 20 or 30. However, the longer the level term, the higher the premiums, because the elder years of the policyholder are averaged into the premium calculation. Another common form is mortgage cover, which is usually a set premium, declining face value policy. This ensures that a mortgage can be repaid in the event of the policyholder's death.




Related articles :


Other related pages :


Finance quizzes :

» Investing money
» Health insurance benefits
» Personal finance
» All lifestyle quizzes

Finance articles
Health insurance
Life insurance
Life insurance
Term assurance
Personal finances
Subscribe to our newsletter here. Submit your email below and choose from the options on the next page.