Term Life Insurance
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What is term insurance?
Term insurance or term assurance gives you financial protection if you die within a specified period known as the 'term'. Your individual circumstances will determine the term that will match your needs, which might relate to the length of your mortgage, or the time until your children become independent. If you survive until the end of the term you receive no payment from the insurance company. There is no surrender value, meaning that if you stop paying the premiums the cover ceases and there is no refund of premiums paid.
Types of term insurance
There are different types of term insurance available including the following.
Level term - the amount of cover stays the same throughout the agreed term.
Renewable term - you have the option, after a specified period (usually 5 years) to take out a further term policy without supplying further evidence of health, unless the policy would continue beyond a specified age (often 65 or more).
Decreasing term – also known as mortgage protection insurance - the sum insured reduces each year, decreasing to nil at the end of the term. Typically, the premium will stay the same throughout the term.
Increasing term or 'with indexation' – the sum insured and premium increase each year by a fixed percentage or based on inflation.
Family Income Benefit – if you die during the policy term a regular income is paid to your dependants for the rest of the term.
Convertible term – you can convert the policy to a whole of life or endowment insurance policy without further evidence of health. If you convert, the new policy will usually cost the same as a normal whole of life or endowment policy based on your age when you exercise the option. Clubfinance does not currently offer this product.
The maximum term for life cover depends on the insurer. The term itself and/or your age at the end of the policy can be subject to a maximum. You can take out a policy on a single life, joint life first death, or life of another basis.
Premiums may be guaranteed for the term of the policy or reviewable, meaning that the insurance company can increase them, usually following an initial period.
Assessing your demands & needs
A loss of life can result in a
reduced income for your family or
other dependants, which could lead to problems paying debts or meeting
In the event of your death, you may want to provide for family or others dependent on your earnings.
On your death your estate might be liable to pay inheritance tax. Inheritance tax is payable if the value of your estate is above a certain limit. Life insurance can be written under trust so that on your death the sum insured does not form part of your estate and depending on the circumstances and the nature of the trust may not be liable to inheritance tax. Trusts can also avoid the need for probate so that claims may be paid more quickly.
Most policies have additional options (these will increase the premium).
Waiver of premium – typically if you are unable to work due to illness or injury, the insurance company will pay your premiums to keep up the policy.
Critical illness – this provides cover against specific serious illnesses. Depending on the policy, a claim for critical illness may mean that the policy will not also pay out under the life insurance element.
To apply for a policy you will have to complete a proposal form. This includes questions on your age, occupation and health. You must answer all questions truthfully. You must also inform the insurer of any change in your circumstances between completing the application and the policy going into force. If you fail to disclose all relevant information, your policy may not pay out. Once the insurance company has received this information, in some cases it may need additional information for underwriting purposes. In some cases your answers may result in you being refused cover or a change to the premium quoted. Once the policy is in force you have an ongoing duty to tell the insurance company about any changes in your circumstances.
Product providers included in the Clubfinance quote
Our online quote and apply service currently includes the following product providers:
Our online quotation service for paper applications includes the following product providers:
- Ageas Protect
- Bright Grey
- Friends Life
- Legal & General
- Scottish Provident
How does Clubfinance provide such low quotes compared to even some of the 'Discount Life Insurance' companies?
First, we do not give advice or recommendations. Second, Clubfinance has a very simple policy of providing excellent value to our customers. We do this by rebating our initial commission to reduce the premium. We rebate up to 90% of initial commissions. We urge you obtain quotes from other companies, as we are confident of our low quotes.
It requires careful planning to choose the right insurance policy. It is important to read the Key Features/Policy Summary and other information relating to each policy to understand the features, benefits and limitations of each. It is also important to make sure that your cover continues to suit your changing needs and circumstances.
This is a general overview only. You must read the Key Features/Policy Summary and other product information specific to the policy you are considering. This overview does not represent and is not intended to represent advice or recommendation. If you need advice you must contact a firm that can provide the advice you need.
Clubfinance Ltd is authorised and regulated by the Financial Conduct Authority (firm reference no. 400139). Clubfinance offers an execution-only discount broker service; Clubfinance does not give advice or recommendations. If you have any doubt about the suitability of a particular product or service, or you require advice, you should seek a personal recommendation from an appropriate firm that does give advice. Clubfinance does not produce the products it arranges, or manage the underlying investments. Payments must not be made to Clubfinance, but to the relevant product provider. Contact details for Clubfinance can be found under 'contact'. Users of this website should be aware of the following:
- Past performance is not a reliable indicator of future results.
- The value of investments and the income from them can fall as well as rise as a result of market and currency fluctuations. For many types of investment, you may be placing your capital at risk, meaning that you may not get back the amount originally invested and you may risk losing your entire investment.
- Some investments and policies may only be suitable as medium or long-term products.
- Tax treatments depend on your individual circumstances and may be subject to change in future.
- This website contains financial promotions relating to services offered by and products available through Clubfinance.
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Clubfinance Ltd is authorised and regulated by the Financial Conduct Authority (400139)