Term Assurance

Level Term
Level term assurance pays out if you die or, as in the case with some policies, you are diagnosed as having a terminal illness during the term of the policy. If you live to the end of the term, the policy expires and no payment is made. Similarly, if you stop paying the premiums at any time, cover will cease. However, some policies may offer a waiver of premium option that allows the policy to remain in force under certain circumstances (disability etc.)

Decreasing Term Assurance
The lump sum payout on offer with decreasing term assurance, as you might guess, decreases in size. The advantage of the reducing life cover under this type of policy is that premiums are likely to be lower too. Decreasing term assurance is also described sometimes as mortgage protection assurance. It is commonly used to protect the repayment of a reducing debt — such as a repayment mortgage, a loan, school fees etc. Some policies may offer a waiver of premium option. If you live to the end of the term the policy expires and no payment is made. Similarly, if you stop paying the premiums at any time, cover will cease.

Convertible Term Assurance
The sum assured stays the same for the term of the policy. However, for an additional cost you will have an option to convert this original plan, or part of it, to another type of policy such as an increasing term assurance, a whole of life policy or an endowment, without further medical evidence being required. If you stop paying the premiums at any time, cover will cease.

Family Income Benefit
Family Income Benefit (FIB) provides a tax free regular income which is paid out for the remaining term of the policy if you die. FIB can provide a replacement income and may be index-linked to inflation, so that cover remains the same in real terms. If you live to the end of the term, the policy expires and no payment is made. Similarly, if you stop paying the premiums at any time, cover will cease.

Death in Service Benefit
Death in service benefit is the cheerful name for cover which is provided by your employer. If you die while employed then it will typically pay between two and four times your salary, a useful boost to your own assurance arrangements. However, you should review your cover if your lifestyle changes or you move jobs.