Types of Life Insurance

Level Term Assurance. Level Term Assurance is the most basic type of life assurance. For fixed monthly payments, the amount of life cover (also known as the sum assured( - is guaranteed for a fixed term. The lump sum is paid out if death occurs before the policy ends.

Decreasing Term Life Insurance & Mortgage Protection Insurance. With Mortgage Protection Insurance (also known as Decreasing Term Assurance) you pay a fixed monthly premium but, instead of the life cover remaining level, it gradually reduces over the term of the policy. It is most commonly used together with a repayment mortgage and the sum assured reduces broadly in line with the amount outstanding on the mortgage over the term. The reducing life cover means that the cost of this type of policy is lower than that of Level Term Assurance.

Critical Illness Insurance. Critical Illness Cover is designed to help protect you financially by paying you a lump sum if you suffer from one of a number of specified illnesses - usually including heart attacks, cancer, strokes, major organ transplants, permanent and total disability and other life threatening diseases. The benefits can be used for any purpose, for example paying off debts, such as the mortgage; being able to change to a less stressful job without worrying about the drop in income; adapting the house or car to accommodate a wheelchair or having a good holiday to recuperate. Critical Illness can also be bought as an add on to Term Life Insurance.

Family Income Benefit Insurance. Rather than paying out a lump sum should you die during the selected term, a Family Income Benefit policy pays out a regular tax free income for your dependants for the remainder of the plan term. The amount of income benefit usually remains level over the plan term selected, although you can request that benefits increase in line with inflation as an optional extra. As an example, if you select a £15000 per annum family income benefit plan over 25 years, and die at the end of year 10, then your dependants will receive £15,000.00 every year for the remainder of the term i.e. 15 years (£225,000.00 in total).

Convertible Term Assurance. Convertible term assurance plans are those term assurances that have an option to convert to another type of life assurance offered by the same provider, such as endowment, without requiring further medical evidence.

Benefit Types

Death Benefit Only A payment of a lump sum upon the death of the life assured

Critical Illness Only  Also called as 'dread disease' cover. Such policies can be stand alone or written as an add-on to term assurance. They will pay out a lump sum in the event of a qualifying illness being diagnosed e.g. certain cancers, heart disease or multiple sclerosis.

Death or Earlier Critical Illness Pays out a lump sum, so that the life assured is protected for both death or critical illness. The policy pays out on the first event and then ceases.

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