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Term assurance

Term Assurance is the most basic type of life assurance and covers policies, which are taken out as a means of protecting against death during a specific term. Term Assurance is the cheapest form of life cover as there is no investment value and the policy will have no surrender value at the end of the term or on early termination.

Below are the main types of term assurance. Naturally, there are additional options available such as including critical illness cover and index linking the benefit, to provide some hedge against the future cost of living.

• Level Term Assurance - the life company will only pay the sum assured if the life assured dies during the term of the contract. The sum assured remains constant during the term.


• Decreasing Term Assurance - the sum assured will reduce over the course of the term. It is normally used to cover a reducing debt, such as the outstanding capital on a repayment mortgage. Although the cover decreases each year, the premiums remain constant.


• Family Income Benefit - instead of a Term Assurance paying out a lump sum during the term, the policy pays out a monthly income instead. In short, the policy is designed to replace the income which the life assured would have provided for his or her family if still alive.