Term Life Assurance
Term Life Assurance - An Overview
 |
 |
 |
 |
Before we look at Term Life Assurance let's recap some basic insurance/assurance terminology. Remember, Term Life Insurance and Term Life Assurance are the same thing and you will see both terms used.
policy
This is the contract between you and the insurance/assurance company. It defines things like the premium, term and benefits
which apply to the Term Life Assurance policy
term
This is how long the policy lasts for. It might be until you die or it could be for a specified number of years.
Benefits
Benefits are what the insurance/assurance company gives you at the end of the policy. For some types of policy,
including Term Assurance Policies, this might be nothing.
Premium
This is the amount you pay to the insurance/assurance company for the term of the term life assurance policy in return for certain benefits.
What is Term Life Assurance? Unlike tradtional Life Assurance, where the policy pays out on the event of the death of the insured life, Term Life Assurance only lasts for a specified term, or number of years. If the insured life dies within the term then the policy pays out. If the the insured life is still alive at the end of the term then the policy comes to an end and no payment is made.
Term Life Assurance - An Example
Let's look at an example of Term Life Assurance.
The insured person: Male, 30 years old
Term: 40 years
Premium: £30 per month
Sum assured: £200,000
- If the insured person dies within 40 years then the insured person's estate receives £200,000. There are no further premiums to pay after death.
- If the insured person does not die within 40 years then by the end of 40 years a total of 40 X 12 X £30 = £14,400 premium will have been paid. There will be NO payment made by the insurance company, either during or at the end of, 40 years.