What is term life insurance?
Term life insurance protects you for a fixed length of time, typically 10-30 years. The term can be longer or shorter depending on what you want the cover for. If you pass away during this period, your loved ones will receive a payout.
Term cover is a good option if you want insurance for a set financial responsibility, such as:
- Raising children
- Repaying a mortgage
- Covering living costs for your spouse if you’re the primary earner
The advantage of term life insurance is that cover limits can be a lot higher and there's a greater level of flexibility to policies.
Key aspects of term cover include:
- Fixed duration of cover
- Simple, predictable protection
- Often lower premiums compared to whole of life policies
- No payout if you live beyond the policy term
Types of term life insurance
Decreasing term life cover helps to cover debts like mortgages, loans or credit cards. The cover amount decreases over time alongside your reducing debts so that it can be paid off when you pass away.
Level term life cover allows you to choose a fixed payment amount that your loved ones will receive if you pass away during your policy term. Whether a claim is made in the first year of your policy or the last year, the payout will be the same.
With increasing life cover, the payout amount increases each year to keep in line with the rate of inflation, which means it maintains the value over time. Your premiums will increase each year to match the higher payout.
Always check your policy wording for specific information.
