Term Life Insurance

Term life insurance is a type of cover that lasts for a specific period of time, or term.  There are a number of used for a term life insurance policy, such as:

• Mortgages where there is a set term during which life insurance is required
• Family protection where a person may want to provide adequate financial protection, in the form of life insurance, for their dependents during the term of their dependency
• Loans (business and personal), again covering a specific term during which if the person died the loan could be repaid

Term life insurance policies are not generally suitable for things such as estate planning or funeral planning due to the risk that the policy could expire before the person dies, leaving the cost uncovered by insurance.

A term life insurance policy can run for the period of time required by the individual, restricted only by the terms of the insurer.  Some term life insurance providers will allow terms as short as 1 year and allow cover for up to a maximum of 40 years or a specific age.  Most term life insurance policies are calculated in whole years

During the period of insurance if the insured party dies then the insurance company will pay out the amount they are insured for.  After the period of insurance a term life insurance policy will expire and at that time the individual would not receive any benefit if they died, the individual would then need to decide if they need to replace the insurance.

Types of term life insurance include:

• Level term life insurance where the amount of cover or benefit remains the same throughout the term of the policy
• Decreasing term life insurance where the amount of cover or benefit reduces over the term of the policy
• Increasing term life insurance where the amount of cover or benefit increases over the term of the policy – often lined to inflation or retail price index

Many term life insurance policies will offer other features such as guaranteed premiums, where the premium of the policy is set at the start of the policy ad does not change during the term.  Also insurance companies will sometimes provide guaranteed insurability meaning the insured party can increase the value of their term life insurance policy during its term without being subject to further underwriting – individual term life insurance contracts would specify when this can be done and to what extent.

How much is term life insurance likely to cost?

This very much depends on age, state of health, smoker status, pastimes, height/weights ratio and the type and amount of cover you want.  You can use our online life insurance quote system to run as many different quotes as you need. Once you have applied the insurance company will notify you of any medical requirements.

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