Everyone's heard of life insurance, but term assurance may not be a phrase heard as much. While life insurance is an umbrella term for all types of life cover policies, term assurance itself is a specific type of policy which in turn encompasses a couple of different varieties.
Strictly speaking, a life assurance policy pays out on the event of the policy holder's death, regardless of when this occurs after the start of the policy. A term assurance policy will be taken out over a fixed amount of time, for example ten years, with the promise of a payout only if the policy holder dies within that period.
There are two types of term assurance; level term and decreasing term. As the names suggest, the level term policy payout remains the same throughout the term, whereas the decreasing term sum assured drops gradually until the end of the term. A level term policy is good to take out in conjunction with an interest-only mortgage when the sum owed stays the same throughout. Likewise, a decreasing term policy can help with a repayment mortgage, the balance of which will decrease during the life of the mortgage.
In addition to a life or term assurance policy, taking out critical illness cover will guarantee a payout if you are diagnosed with a critical illness or condition such as cancer, MS or a stroke. This will only apply if you had no pre-existing related condition prior to taking out the policy, which is why it's important to be as honest and detailed as possible on your initial application.
No matter if you decide on a full life assurance policy, or simply a term assurance one, insurance is the best way to ensure your family will be provided for. Don't just go for the cheapest policy; get the best life insurance you can afford.
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