Stop Overpaying For Life Insurance By Choosing The Right Term Policy

Term life insurance is normally taken out for one or more years, and is only payable if the insured dies within that period. In contrast a whole life policy would payout whenever you die, but these policies are more expensive, at least initially. Term life insurance for that reason can be more affordable.

Why term assurance?

Term life assurance is often suitable if you don’t want to pay the higher cost of a whole life policy, yet want to provide your loved ones with a sum to replace some of your income, cover a debt, or pay funeral expenses after you have gone. It is often useful to cover some specific, time-limited event in the future like paying for a college education or repaying a loan.

Level term assurance

There are several options available including level term assurance in which the amount of death benefit you purchase remains the same the whole time. The premiums may remain the same as well, although they may only stay the same for a limited time and increase after that, depending on the policy.

Decreasing term assurance

The death benefit in decreasing term assurance will reduce over time, although the premiums usually stay the same. This is suitable for someone who has a reducing debt, such as a mortgage, to cover.

Renewable term assurance

This allows you to renew the policy for another term without having to show you are in good health. The premiums are however likely to increase for the renewed term.

Convertible life term assurance

This type of cover has a window period in the term when you can convert the policy to a whole of life policy. Again you won’t have to provide evidence of good health, but the premiums will be higher.

Return of premium feature

A new feature which is becoming more popular is the right to have some or all of the premiums you have paid, returned to you, if no death benefit is paid out during the term. This of course will be more expensive and you have to weigh up whether it is worth the extra cost.