This pays a tax-free lump sum in the event of death and/or critical illness during a specified period in return for a fixed monthly, or annual premium. At the end of the term the policy finishes and there is no investment value.

There are five types of term assurance available:

• Level Term Assurance
• Decreasing Term Assurance
• Increasing Term Assurance
• Convertible Term Assurance
• Renewable Term Assurance

The amount of your contribution depends on:

• the level of life cover you require - i.e., the amount you wish the plan to pay out
• how long you wish the plan to last - usually called its "term"
• your sex
• your age
• your smoker status, and
• your health at the time of taking out the plan.

A term Assurance provides a low-cost means of cover. The policy has no “surrender value” – in other words, if the insured person survives until the end of the term, then no payment is made by the insurance company.
You can make a joint application, usually with your spouse or partner. The annual sum is payable on the first death of either of the lives assured within the term of the plan.

It is usually recommended that, for a small additional cost, 'waiver of contribution benefit' be included. This to provide for premium payments in the event of long term ill health or incapacity and commences after a waiting period of normally 6 months when premiums then are taken up by the insurer on your behalf.

Level Term Assurance

The amount of cover stays constant during the term of the plan. The contract contains no investment element. If you were to fall ill after the policy has expired, you could have difficulty replacing the cover.

Decreasing Term Assurance

This type of plan provides a lump sum payment. It is commonly associated with mortgages as ‘Mortgage Protection Insurance’ and it pays an amount that reduces over the term of the policy to reflect the reducing debt under a repayment mortgage. This results in lower premiums than level term assurance.

Increasing Term Assurance

This type of policy pays an amount that increases over the term of the policy, thus helping to counteract the effects of inflation on the real value of the benefit payable.
Increasing Term Assurance provides for the sum assured to be increased regularly (without any evidence that the life assured is still in good health) over the term of the contract (for example, by 10% per annum), or alternatively offers the option to the policyholder to make such increases. For this variation on the basic term contract, the insurance company will charge higher premiums, which also increase as the sum assured increases.

Convertible Term Assurance

Convertible Term Assurance allows the policyholder to change the Term Assurance into either an endowment policy or a whole of life policy with up to the same amount of cover at any time before the end of the term of the original policy. This is a valuable feature if the policyholder’s need is for additional savings (convert to endowment) or a longer-term protection (convert to whole of life).

Renewable Term Assurance

This policy allows the clients to effect a term assurance policy for, say, three or five years, at the end of which the client is then given the guaranteed right to effect a similar policy for a similar term of years without having to give the insurance company any evidence that he/she is still in good health. The short initial term of years means that premiums are very low, whilst the guaranteed renewability means that the client will not then be left without life assurance at the end of the term. Although premiums will be low for the initial term, the premium rates will increase with age each time a new policy is taken out under the option, but they are guaranteed to be normal premium rates provided the initial proposal was accepted on normal terms.

Finally, you should note that a number of insurance companies offer contracts which include two, or even all, of these last three variations. The premium will normally be higher than that for a basic term contract, but the client gains added flexibility and guaranteed future insurability. However, in these circumstances the adviser should compare the benefits with those available from a whole of life policy.

We offer an extremely competitive service, so for more information about Life Insurance and Critical Illness cover contact us on:

Telephone: 0115 945 5199   Fax: 0115 982 6250

Email: info@davidburnell.co.uk
and we will find a cost effective solution for you.

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David Burnell Financial Services Ltd
1 Albert Road, West Bridgford, Nottingham, NG2 5GS

Tel: 0115 945 5199   Fax: 0115 982 6250
Email: info@davidburnell.co.uk

David Burnell Financial Services Limited is an appointed representative of IN Partnership the trading name of The On-Line Partnership Limited
which is authorised and regulated by the Financial Services Authority.

Registered Office 29 Arboretum Street, Nottingham NG1 4JA. Registered in England, Company Number 4619997
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