A ‘term life insurance’ policy provides a guaranteed death benefit to your beneficiaries if you die during the agreed term.
For example, you take out a £250,000 policy for 50 years. You pay £10 per month (known as the “premium”) and if you die within those 50 years, the insurance company pays out the amount of cover you bought, £250,000 (these figures are just there as an example to help you understand how this works).
Carrying on with that same example, if you don’t die in the 50 years you took cover out for, you will need to buy a new policy when it expires. The 50 year policy only pays out if you die within those 50 years.
A term life insurance comes with many benefits, the first in line is its affordability compared to other types of life insurance policies.
Source – @homajob
There are 2 types of term insurance.
Decreasing term insurance is where the amount paid out when you die, decreases year on year. The idea is that the insurance is there to cover your mortgage. As you repay your mortgage over time, the balance you owe decreases and so the payout you receive from your insurance decreases accordingly.
Level term insurance is there to protect your loved ones financially when you pass away. You choose the amount of cover you want (known as the “sum insured”) and the time you have the policy for (known as the ‘term’). As above in our example, your monthly repayments (premiums) are fixed for the entire term, as is the payout you receive.
Life comes with unexpected changes. Some of those changes might trigger a sense of insecurity if you are financially responsible for your loved ones. A life insurance policy will provide a financial cushion in the case of your sudden demise.
Here are just a few of the key changes in life and the financial responsibilities associated with them that might compel you to opt for a term life insurance policy:
The insurance provider will go through the process of evaluating your credentials before giving their final verdict. This process is called underwriting and involves considering several factors that can affect your term agreement and purchase value.
Term life insurance is extremely beneficial for many. However, it is also important to consider its limitations. Some of the limitations of term life insurance are listed as follows:
Because we play by the book we want to tell you that...
1. We understand equity release isn’t for everyone, and we’ll never say it’s the right option for you, that’s why we pass you onto an Expert.
2. A lifetime mortgage is a loan secured against your property. With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. Usually, that’s when you, or the last remaining applicant, either passes away or moves into long-term care.
3. With a lifetime mortgage you’ll still retain full ownership of your home.
4. Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.
5. Mortgage Advice Bureau Later Life offer lifetime mortgage products from a carefully selected panel of providers.
6. Unless you decide to go ahead, Mortgage Advice Bureau Later Life’s service is completely free of charge as their fixed advice fee of £1,295 would only be payable in completion of a plan.
7. ClearKey is an independent marketing website which only acts as an introducer to companies who offer advice on various financial plans, products and services.
8. Our partners are authorised and regulated by the Financial Conduct Authority.
9. ClearKey.co.uk are not authorised to give any advice and we are not liable for any financial advice provided by or obtained through a third party.
10. Life insurance products attract terms and conditions. Price information contained within this website are for illustration purposes only. You will receive a full policy document upon application which will set out the terms, conditions and limitations of cover provided under the plan.
11. Your home may be at risk if you do not keep up repayments. Think carefully about securing debt against your home. When consolidating existing borrowing be aware that extending the term could increase the amount repaid.