Term Insurance

Term insurance is essentially the simplest form of life insurance. It pays out a sum of money (known as the 'sum assured') if you die or become terminally ill within an agreed time period; if you do not die or are not diagnosed as terminally ill within this period, no pay-out will be granted. In return for this protection, you pay a monthly sum to your insurance provider. This monthly sum is known as a 'premium'. The period of time that you are covered for is decided by you, and can be any length of time between one and thirty years.

If you take out term insurance you must be aware that if you do not die within the period agreed (known as the 'term'), you will not get any of your money back. Many people take out term insurance to cover the cost of their mortgage in the event that they die or become terminally ill before their mortgage debt is fully repaid; this ensures that their family or dependents will not have to take over the mortgage repayments and/or risk losing the property.

Term insurance is often the cheapest form of life insurance. It does not build cash value, meaning that you cannot ask for your money back after the term is over, nor will you receive a refund by cancelling your policy. For broader protection, you may be able to add critical illness cover. This would increase your insurance protection, so that in the event of diagnosis of a serious illness or condition, such as Alzheimer's disease, you will receive a pay-out. In addition, term insurance is often available as a joint policy, which would cover both you and your partner.


There are various types of term insurance offered. For details, see:

• Level Term Insurance
• Decreasing Term Insurance
• Increasing & Index-Linked Insurance
• Renewable Term Insurance
• Convertible Term Insurance