Term Assurance & Whole of Life or Endowment Policies

What is the difference between Term Assurance and Whole of Life or Endowment policies?

The simplest answer to this question is that term insurance provides protection against death during a specified period and whole of life insurance provides protection against death at any time. This is a very important distinction to make. Term insurance will last for between one and about 30 years. Should you die during this term, you will receive a benefit. Whole of life insurance will always result in a payment. How much that payment is depends on what type of policy it is and the performance of any investments within the policy.

Term insurance provides more insurance for less money than whole of life policies. This is because premiums are lower, as the insurance company may not have to pay out at all. Therefore you are able to purchase more coverage when you most need it.

Level term insurance is appropriate for someone needing to provide a certain amount o

f money to cover a need during the term. For instance, someone who has an interest-only mortgage can take out level term insurance to cover their capital repayment.

Increasing term assurance is a fixed term policy where the sum assured will increase, either by a set percentage or by the Retail price index (RPI) throughout the policy term. Your premiums remain level throughout the term if the sum assured rises by a set percentage, or will rise according to the RPI if the sum assured does the same.

Convertible term insurance provides the option to convert parts of the sum assured to whole of life, endowment or further term assurance without further medical evidence.

For all types of term insurance, the amount of your premiums is determined by certain variables such as your age, the amount you want to be insured for, the length of the term, and whether you smoke or not. You may or may not need to undergo a medical. Ultimately, the insurance company lays bets on the chances of you dying whilst the term lasts.

A Gift inter vivo policy is designed to cover for

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