Term Insurance

Term Insurance



Term Insurance
Term insurance is​ a​ level term life insurance product that pays out a​ lump sum when the​ insurance policyholder dies or​ becomes terminally ill .​
It provides peace of​ mind to​ the​ insurance policyholder that loved ones left behind after their death will be financially secure .​
Term life insurance can be configured to​ pay off all existing loans - including the​ mortgage - and leave a​ cash sum in​ the​ bank to​ support your spouse and children .​
If you​ don't want your family to​ have to​ cope with financial pressures during their bereavement,​ or​ struggle to​ find the​ funds to​ pay for your funeral then term insurance is​ the​ life product to​ have.
Term insurance is​ different to​ mortgage insurance
It is​ important to​ realise that term insurance is​ a​ different life product to​ mortgage insurance .​
Term insurance is​ a​ long-term insurance product that can be taken out over a​ lifetime of​ 50 years .​
During this time the​ insurance premium remains the​ same as​ does the​ amount paid out in​ the​ event of​ death or​ terminal illness .​
Mortgage insurance on​ the​ other hand mirrors the​ life of​ your outstanding mortgage loan .​
The insurance premiums remain the​ same throughout the​ life of​ the​ product,​ but unlike term insurance the​ amount paid out upon death or​ terminal illness reduces in​ line with the​ outstanding mortgage loan .​
So,​ if​ you​ were to​ die at​ the​ point that you​ owe only £2000 on​ your mortgage,​ then the​ mortgage life insurance product would only pay out £2000.
Terminal illness
Terminal illness cover generally comes as​ standard with term life insurance polices .​
The terminal illness clause tends to​ trigger pay out if​ the​ insurance policyholder is​ diagnosed with a​ terminal illness named on​ the​ term policy and is​ given 12 months or​ less to​ live .​
Pay out in​ these circumstances allows the​ policyholder themselves or​ someone with power of​ attorney for the​ policyholder to​ receive the​ full lump sum from the​ term life insurance policy .​
They are then free to​ enjoy the​ final months of​ their life with their family free from financial constraints .​
When a​ term life insurance policy pays out for terminal illness the​ policy will end .​
Therefore the​ life insurance company will not be liable to​ pay anything further upon death of​ the​ policyholder.
Term life insurance restrictions
As with most insurance policies there are restrictions and exclusions that apply to​ term life insurance policies .​
The main restriction is​ on​ pay outs to​ term life insurance policyholders who become critically ill,​ yet are not diagnosed as​ terminally ill .​
In this case,​ a​ standard term life insurance policy will not make a​ payment,​ unless a​ critical illness policy has been added to​ the​ term life insurance.




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