Term Assurance pays out if you die within a set period of time (the ‘term’). If you survive the term, it pays out nothing. You might set the term at, say, the number of years until your children are financially independent, or the number of years remaining on your mortgage. It is not an investment; however, it is a low-cost form of life insurance.
There are two types of term assurance available. Firstly, decreasing term assurance which usually runs alongside a capital repayment mortgage where the sum assured decreases at a similar rate to the outstanding mortgage amount and term.
The second form of term assurance is level term which is commonly used in conjunction with an interest only mortgage. The amount assured is set at the outset and remains constant, meaning that in the unfortunate event of death the amount paid out will be the original sum assured.
These policies are not savings or investment plans, so if you cancel your policy, you will not get your money back. All protection products have benefits and drawbacks. Drawbacks can include exclusions and limits to the amount of cover. We will discuss these with you before we make a recommendation.
