Life Assurance comes in three basic forms.
Term Assurance
is generally the cheapest form of Life cover as it pays the benefit only if death occurs within the agreed time frame. Term Assurance can be arranged on a level basis for a set period of time, on an annually renewable basis, or on a decreasing sum assured basis to cover the outstanding capital on a capital and interest repayment loan.
Some Term Assurance plans may have an option to convert to a Whole of Life plan at any time during the original term without he requirement for additional medical evidence.
Whole of Life Assurance
is designed to cover you throughout life and, as the name suggests, will always pay the death benefit provided premium payments are maintained. Clearly, this type of cover will always be more expensive than term but the benefit is that it may accumulate a cash value at a future date.
Endowment Assurance
is generally the most expensive form of Life Assurance since it sets out to provide either a specific cash value after a specified period of time or an equivalent cash sum should death occur prior to the maturity date. Most commonly used in the UK as a repayment vehicle under an interest-only mortgage arrangement.
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