Life Assurance

What is it?

A term life assurance plan is the most basic form of life insurance and is usually the cheapest way to insure your life. It covers you for a fixed period and pays out a one off lump sum if you die during the policy term.
With some term insurance policies you can add additional options, for instance critical illness cover. If you do add on critical illness cover, the plan will pay out once on diagnosis of a qualifying critical illness or if you die during the term of the policy.

Who is it for?

This type of plan is designed for those who want to leave a lump sum in the event of their death within a specified time period whilst keeping the cost to a minimum. Term assurance can protect your family from the financial implications of a personal tragedy and is particularly important if you have young children or dependents. It can be used to cover a mortgage, other loan or to ensure that your family is protected from the effects of having to repay a debt after the main breadwinner has passed away.

Term assurance is also widely used for business protection. Many companies have shareholder protection to protect the company in the event of the death of a shareholder, and keyperson cover to provide a benefit to the company following the death (or critical illness) of a key employee.

Other options

Whole of Life is similar to term assurance, except the policy runs for the ‘whole of your life’.

Relevant Life is a term assurance policy which is HMRC approved and allows directors of limited companies to set up a tax efficient ‘death in service’ plan. The owned by the company and the premiums paid for by the company and are allowable as a business expense. The policy is written in trust for the sole benefit of the director’s beneficiaries. HMRC have approved the premiums as not attracting any benefit in kind.

Mortgage Protection also known as decreasing term assurance. This is a term assurance policy where the sum assured reduces over the term. It is specifically designed to provide sufficient cover to repay a debt, usually a mortgage. Because the sum assured reduces, the premium is lower than a level term assurance policy.