Product Guides
Protection
Term Assurance
Term Assurance is the most basic form of life assurance. It is designed to provide a lump sum payment, known as the sum assured, in the event that death of the life assured occurs during the policy term.
The sum assured, premium and term are set at inception, and may remain fixed or increase at a specified rate which must be selected at outset.
Sum Assured Options
- Level Cover - Under a level term policy, the sum assured remains fixed for the whole policy term. Although the amount stays the same, inflation may erode its value.
- Decreasing Cover - sometimes known as 'Mortgage Protection' often used to cover loans or mortgages where the capital owed decreases. This is usually cheaper than level term assurance because the level of cover decreases as the end date approaches.
- Increasing Cover - The sum assured on this type of contract increases annually as the end date approaches, and is designed to combat the effect of inflation.
Premiums
- Guaranteed Premiums - This is the most common option for level and decreasing policies. The premiums are guaranteed at outset and remain the same throughout the policy term. If an indexed sum assured is selected with a guaranteed premium the increases in payment mirror % increase in sum assured exactly.
- Reviewable Premiums - Are often cheaper at outset but are reviewed at set periods throughout the term, usually increasing to based on age and the life office experience of risk
Term
- The term of a contract is usually fixed at outset, and is between 5-25 years, although there are exceptions to go above and below this.
- Convertible term is a product which allows the plan to be converted without further medical evidence to a Whole of Life or endowment plan. This option adds a cost to the plan.
- Renewable term allows a policy to be renewed for a specific further term at maturity without need of further medical evidence as before the extra option comes at a cost.
- Some contracts are 'rolling' and effectively renew after approximately 10 years. These are normally reviewable contracts with the sum assured and premium also renewed at this point.
Term Assurance can be offered with the option of adding Critical Illness Cover and/or Waiver of Premium benefits if required.
Lives assured can be single or joint.
Guide to Protection
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