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 Main types of Term Cover ~ Lump Sum or Income Cover ~ Life Insurance

Term Cover assurance pays out only if you die within a certain term. Whole of life assurance pays out whenever you die and some plans may or may not also contain an investment element to them. By their very nature, these plans will pay out on death whenever this may occur, so cost a lot more than term assurance plans. We currently do not advise on whole life insurance with an investment element but can refer you to a fellow IFA from the Sesame.

Term Cover Insurance - Lump Sum     

This is the simplest and cheapest type of term cover, and is known as term cover insurance because you choose how what term or long you're covered for, say, 10, 15, or 20 years (the term).

Term cover only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out if either of you die during the term.

Things to look out for ...What type of term cover policy do you want? For example

• Increasing term cover policy (where cover and premium rise over the years)
• Decreasing term cover policy (where cover and premium fall over the years)
• Renewable term cover policies (which let you extend the original term).

Term Cover Insurance - Family Income Benefit

This policy pays out income rather than a lump sum & maybe suitable for those who require income on death. This plan may be increasing to help offset inflation. 

Term Cover Insurance Advice - Check the Small Print

Check for exclusions - in other words, when the policy won't pay out. For example, most do not cover death due to alcohol or drug abuse. You might not be covered while taking part in risky sports. If your health is poor before or when the term cover policy starts you might be refused cover altogether eg; You have developed health problems such as had a heart attack, stroke, depression, cancer, diabetes or say stress. Please ensure you advise the Term Cover Life Insurance Companies otherwise this may result in none-disclosure & the plan is void.

Premiums shown are usually fixed for the whole term. There are also term cover contracts where premiums are reviewable, after a certain period, usually 5 years.

How flexible is the new term life cover contract? Can you reduce or increase cover easily as your circumstances change? Are there extra charges for doing this? Does cover stop immediately if you miss a payment or is there a period of grace?

By paying extra, you can usually include a waiver of premium. It pays the premiums if you can't work because of a long-term illness so that your cover is not interrupted.

If you want to change insurer, check the level of premiums for the new contract before switching (premiums may have gone up because of older age or because you have developed medical conditions). Also check the new level of cover compared to the previous one. Different benefits may be available, and different exclusions may be applied - for example you may not be covered for medical conditions that have developed before the switch even if these were covered under the previous contract. If you do decide to change, make sure you do not cancel your original cover until you are fully covered by the new contract.

The Term Life Cover policy can be set up under trust. This means that in the event of death, proceeds of the policy are paid directly to dependants of your choice. Provided a trust is set up properly, there may be benefits to doing this. Most Insurers proivde standard trust forms. However, using a trust may not be suitable for everyone and because of the complexities we recommend you may wish to seek legal life assurance advice. 

What does my Term Cover Cost ?

This depends on several factors, such as the amount of cover you want and the length of the term. Naturally, it's also based on the likelihood of your insurer having to pay out: if you're a smoker and do a dangerous job, you'll pay more than a non-smoking office worker.

Term life cover also costs more for men because, on average, they don't live as long. Always compare what's covered by a New Life Cover policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection.