Life Assurance - Types of Life Cover

Level term assurance plans offer a predefined fixed level of life cover for a specified period.

Increasing term assurance plans offer a level of life cover which increases annually throughout the term of the plan. Such plans are used to provide cover that retains its purchasing power during the period of cover.

Decreasing term assurance plans offer a level of cover that decreases annually over the term. Such plans are suitable to cover a decreasing liability, e.g. a repayment loan.

Renewable term assurance plans are those term assurances which have an option to extend the term without requiring further medical evidence.

Convertible term assurance plans are those term assurances which have an option to convert to another type of life assurance offered by the same provider, such as endowment or whole of life, without requiring further medical evidence. This can be particularly advantageous, as we do not know what the future will bring with regard to our health.

Pension term assurance can be written under legislation relating to either Personal Pensions, or Free Standing Additional Voluntary Contributions. The maximum contribution is limited to 5% of salary, and tax relief is available on the premiums paid. This type of cover is not available as a joint life policy.

Whole of Life Assurance pays out the sum assured on death at any time during the policyholder's lifetime subject to premiums being paid to the date of death.

Additional benefits such as Critical Illness can be combined with the policies described above, and if we agreed that these were appropriate for you, they are detailed elsewhere in my letter.

Other policies offering a savings element as well as pure life cover (e.g. endowment assurances) are usually effected in connection with a specific need, such as saving for the future, or covering a mortgage, and are therefore not described here.

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