Term Assurance
Term insurance is where cover is provided for a fixed term. The sum assured will only be payable on death, with no investment benefits nor payment on survival.
It is important to understand this concept. Should you survive past the end of the term, you will not receive any payment as your policy will expire.
Should you stop paying the premiums at any time, cover will stop, and there is no surrender value. This is unless you pay extra on your premiums to have a waiver of premium so you can get a break from premiums should you lose your job.
For all types of term insurance, the amount of your premiums is determined by certain variables such as your age, the amount you want to be insured for, the length of the term, and whether you smoke or not.
LTA – Level Term Assurance: This cover remains the same for the term of the contract, as does the premium. Premiums and benefits will remain level over the term of the contract, except for mortgage cover where the premium will remain level and the benefit will decrease over the term.
CTA – Convertible Term Assurance: This cover is the same as for the level term assurance, but at the end of the term there is an option to continue cover without any further medical evidence being submitted. The terms at which the cover will continue are not specified. Premiums and benefits will remain level over the term of the contract, except for mortgage cover where the premium will remain level and the benefit will decrease over the term.
DTA – Decreasing Term Assurance: This cover reduces each year, and is generally used in conjunction with a mortgage, to repay the outstanding mortgage balance.
Dual Cover: Means that both lives are covered independently, that separate payouts are possible on the death of both lives assured.
Joint Life: Means that there is only one payout possible, which will be paid on the first death.
