Life Assurance
Term Assurance
In exchange for paying a premium to a life assurance company they agree to pay out a sum assured if the insured individual dies within a set period of time i.e. the term of the policy.
It is also possible to include critical illness protection and therefore the sum assured would also pay out on death or diagnosis of one of the specified medical conditions, within the term and on a first event basis.
If the policyholder does not claim within this period of time the policy will lapse. There is no value paid at maturity.
These policies are relatively cheap and may provide protection to the beneficiaries such as family members if the policyholder dies or is diagnosed with one of a number of specified illnesses.
The term assurance policy can be used to provide valuable protection and may be used to provide cover for an outstanding mortgage.
Your home may be repossessed if you do not keep up the repayments on your mortgage.
Whole of Life Policies
Whole of Life policy will provide a set level of cover for the whole of the insured’s life. This will be subject to review throughout the life of the policy and therefore the premium may change. The cost is generally higher than term assurance as there is certainty that the policyholder will die at some time!
The policy can be written on a single or joint life basis. Joint Life second death policies are often used to cover an Inheritance Tax liability.