Term Assurance

Term assurance is generally the cheapest - and simplest - form of life assurance. You insure yourself for a set term - until a loan is paid off, for example. It doesn't contain any investment element - it simply promises to pay out if you die within the term. If you don't die within that time, you receive nothing.

Term policies can either be level or decreasing. A level policy simply means the sum assured remains 'level throughout the term of the policy. If you die on the first day of the policy, you get exactly the same sum as you would if you died near the end of the policy. A decreasing term assurance policy on the other hand, will pay out more at the beginning of the policy than it would at the end.

A term policy pays out either in the form of an initial lump sum or as a series of regular payments until the end of the term, depending upon what is selected at the outset.

Term Assurance can have other features, whereby the cover may be:

• Increasing or Increasable

• Renewable

• Convertible

Or a combination of any of these to suit individual needs.

Some term policies have rider benefits, which are extra sorts of cover, added on to the principal life cover. Such benefits include:

• Waiver of premium benefit - the premiums are in effect paid for you in the event of defined incapacity due to illness
• Accident, Sickness and Unemployment benefit - Accident, sickness and unemployment (ASU) insurance provides financial protection if you are unable to work as a result of an accident or ill health, or in the event that you become unemployed through no fault of your own.
• Critical illness cover - the benefit is paid before death on the diagnosis of life shortening disease (e.g. cancer). This benefit may replace the death benefit, or it may be paid as well

All these riders cost extra and are only paid subject to meeting specific criteria.

Protection is required for various reasons and in different shapes and sizes to meet differing needs, ranging from the need to receive a lump sum in the event of death to using as an option within a trust when estate planning.