Term Insurance Explained
When it comes to buying life insurance there are essentially two types you can buy – whole life insurance and term insurance.
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Term Insurance Explained
What is it? Term insurance is often a popular choice of life insurance policy because it is the cheapest, most basic form of life insurance.
What does it cover? Term insurance covers you for a set fixed period. It will pay out a one-off lump sum if you die within that period – otherwise known as the term of the policy.
What about critical illness cover? There are some term insurance policies available where you can add additions such as critical illness cover. Critical illness cover on term insurance means if you get a life threatening illness such as cancer, the policy will pay out a lump sum on diagnosis.
Why should I get term insurance? This kind of life insurance is good if you want to ensure your dependants – wife, husband or children – will receive financial aid after you die. They will receive a lump sum if you die within the term of the policy. It can also be used to pay off a mortgage after you die.
What are the benefits? The benefits of purchasing term insurance are it is one of the most affordable types of life insurance policies you can buy. Premiums are usually monthly and relatively cheap.
What are the cons of term insurance? If you die or are diagnosed with a critical illness within the policy term, your dependants will receive the lump sum. However if you live beyond the term of the policy, it will have no maturity value.
Although term insurance is the cheapest way to pay for life insurance, there is no investment value to the policy. So if no claim is made and you outlive the term, there is no maturity value payable at the end of the term. Also, if you stop paying your monthly payments, the insurance cover will stop.
There are different types of life insurance available and it may be worthwhile seeking financial advice before choosing the one best suited to your needs and circumstances. There are variables of term insurance you can opt for:
- Level term assurance – this pays a lump sum on death that remains constant throughout the insurance term
- Decreasing term life insurance – this is often used to protect mortgages and loans where the amount owed decreases as the years pass.
- Family income benefit – this pays out a regular income rather then a lump sum, but this is only paid for the term of the policy.
To find out more about the types of term insurance available and which life insurance suits you, seek independent financial advice.
Jump Money are specialists in life insurance and are there to answer any questions you may have related to life insurance, life assurance, term insurance and life cover. They will strive to fit an insurance package to the exact criteria you need in order to help you avoid buying products you do not need as well as helping you fully understand your purchase.
To find out more about how Jump Money can help you protect yourself and your belongings call now on 0845 8516262 or visit the website at www.jumplifeinsurance.co.uk.