Life Insurance

The most basic type of life insurance is called term life insurance, where you choose the amount you want to be insured for and the period for which you want cover. If you die within the term, the policy pays out to your beneficiaries. If you don’t die during the term, the policy doesn’t pay out and the premiums you’ve paid are not returned to you. There are three main types of term assurance to consider; level term, decreasing term and increasing term insurance. Sometimes a combination of these is the best answer.

Level Term: Level term pays out a lump sum if you die within the specified term. The amount you’re covered for remains level throughout the term regardless – hence the name.

Decreasing Term: Decreasing term means the amount you’re covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgage.

Increasing Term: Increasing Term means the amount you’re covered for increases over the term of the policy, to offset the effect of inflation so that your family can make the most of your payment.