Term Assurance/Mortgage Protection

 

Life Assurance is necessary to provide for those who would suffer financially from your death. It can be designed to pay a lump sum or a regular sum over a period of years, in the event of death during the term of the policy.

 

Typically, premiums may be guaranteed (for the life of the policy), or reviewable (subject to increase at regular intervals over the policy). Whilst guaranteed premiums are usually preferred, reviewable premiums are cheaper at the outset.

 

Individuals or couples (joint life) may be the lives covered. In the case of a joint Life Policy, the policy may be written on a first death, or second death basis.

 

 

 

Where increasing cover is needed, this is usually accompanied by a commensurate increase in premium. Typically, the increases in both will be a fixed percentage each year, or by reference to an index such as the Retail Prices Index. 

 

Level Term Life Insurance: 

 

The most popular form of Life Assurance, Level Term pays a single lump sum if you die at any time during the term of the policy. 

 

For example, a £250,000 level term policy for 25 years. A thirty year-old male non-smoker might pay around £14.32 per month (guaranteed for the term of the policy) at current rates. This is the “classic” form of life insurance with which most people are familiar. It is also suitable to protect an interest-only mortgage or other similar debt.*

 

*Research was done on 13/08/2007.

 

 
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Mortgage Protection: 

 

Pays a single lump sum, which is designed to be equal to the outstanding balance on a Repayment mortgage. Therefore, in the event of death, the mortgage should be paid off.

 

This is a Decreasing Term policy (an alternate name): a claim at the beginning of the policy will pay substantially more than one made just before the end of the policy. Because the cover decreases, the risk to the Insurance Company is less, and so the premiums are cheaper than for the equivalent level term policy.

 

This cover should not be confused with cover for mortgage repayments. Such cover can be obtained through an Accident, Sickness and Unemployment (ASU) policy, or through Income Protection insurance.

 

Waiver of Premium Benefit is a small side-policy which will pay your premiums for you in the event of a long-term illness or disability resulting in your inability to work. There is a waiting period before this can be triggered - usually 3-6 months.