There are many types of policies that you can put in place when you are thinking of taking out life insurance, sometimes sales people confuse the potential policy holder into purchasing a product that is totally unsuitable for them. The client should have a basic understanding of the policies available. There are three types of life insurance policies each with their own bespoke properties as outlined below.

TERM ASSURANCE

Term assurance is the most basic form of life insurance. It will pay out only if the life assured dies during the term of the policy. If the life asured survives, no payment is made and the policy expires. There are a number of differennt types of term assurance polices such as Level Term Assurance, Decreasing Term Assurance, Renewable Term Assurance, Increasing Term Assurance and Convertible term assurance. Each product has its own benefit and will be discussed in another article. Link will be provided soon.

WHOLE LIFE INSURANCE

Whole Of life polices are polices which run for the course of the policy holders life until they die, they will continue to pay premiums which are based on their health, age and other factors which determine the lifespan of a individual. A payment is always made at the death of the policy holder. Whole of life assurance has a investment element attached to it, as the policy progressed more of the premium is used to buy investments and less to buy term assurance, this way there is value in the policy at the death of the policy holder. Premiums are usually higher than level term assurance.

ENDOWMENT ASSURANCE

Endowment assurance is a policy where the sum assured is payable on a fixed date or on the life assured earlier death. The premiums are more expensive than Whole of life assurance, this is because there is a possibility of a earlier payout. Endowment polices can be surrendered however the value is usually low, this is to keep the policy running as long as possible so that both the life offce and the policy holder can mutually benefit.

SUMMARY

Before choosing which policy to go for discuss all your financial requirements with a independent financial advisor from a reputable establishement, the advisor is trained in this field to provide bespoke products tailored to your needs. Ensure you find out the commission structure payment and that the whole market has been searched to find the most suitable product. Remember your right to complain if you have any concerns, the law is on your side so use it when it is neccessary.

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