Policy Types:
Level Term Assurance
Level Term Assurance provides cover for a specific time frame, usually at a fixed monthly cost. Some policies allow cover to be indexed-linked which means that cover will increase annually by usually 5%.
Convertible Term Assurance
A Convertible Term assurance policy is similar to a level term plan in that the cover is chosen for a specific term, there is usually a fixed monthly payment and some can be indexed-linked to allow an annual increase in the level of cover. Where it differs is that it allows further cover to be put in place without evidence of health, anytime up to the final day of the existing policy. This effectively gives the option of taking out another life assurance policy with no reference to health at that time.
Whole of Life Policy
A Whole of Life policy can provide cover to last throughout your life and there is usually a surrender value building up within the policy. Some contracts are reviewed after ten years and periodically thereafter to ensure that there is a sufficient premium being paid to maintain cover until the next scheduled review. Cover generally increases at each review.
Mortgage Protection
Mortgage Protection policies are generally put in place to cover an outstanding mortgage loan amount. For most home loans, it will be a requirement of the lender that such a policy is put in place and cover is usually for the amount and the term of the loan. As this cover decreases in line with the reducing loan balance, this cover is often the cheapest form of life assurance cover.
Types of cover:
- A single life basis, i.e. insuring the life of one person
- A joint life basis, i.e. insuring the names of the persons on the policy which will only pay out in the event of one death
- A dual life basis, which will pay out on the first death and also on the death of the second life on the same policy
