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Glossary
Level
Decreasing
Family income benefit
Critical illness
Terminal illness
Options
Term Assurance
This is life assurance plan that accrues no cash-in value. There is no investment content, and therefore it not normally regulated by the Financial Services Authority. The policies pay out on the death (or earlier critical illness if selected) of the life assured. The plan then stops. A joint life plan normally pays out on the 1st death, but you can choose 2nd death, which makes the plan cheaper.
Level Term Assurance
The premium and cover remain the same throughout the term. The plan is used for general life cover or in connection with an interest only mortgage.
Example premiums for 25 yr plan
| Joint life, 25 next birthday, non smokers |
£5.50 per £100,000 |
| Joint life, 25 next birthday, smokers |
£9.90 per £100,000 |
| Joint life, 35 next birthday, non smokers |
£10.90 per £100,000 |
| Joint life, 35 next birthday, smokers |
£23.20 per £100,000 |
| Joint life, 45 next birthday, non smokers |
£29.80 per £100,000 |
| Joint life, 45 next birthday, smokers |
£67.20 per £100,000 |
Decreasing Term Assurance
The premium will remain the same, but the level of cover will decrease in-line with the outstanding balance on a repayment mortgage.
Example premiums for 25 yr plan
| Joint life, 25 next birthday, non smokers |
£6.25 per £100,000 |
| Joint life, 35 next birthday, non smokers |
£9.70 per £100,000 |
| Joint life, 45 next birthday, non smokers |
£21.20 per £100,000 |
Family Income Benefit
This plan pays a fixed income from the date of death of the life assured until the end of the plan. It is therefore comparable to a decreasing term assurance policy. It is used to provide an income for dependents after death, and is the cheapest way to do so.
Example premium for 25yr plan
| Joint life, 35 next birthday, non smokers |
£16.00 per £10,000 income per annum |
Critical Illness
The plan pays out on diagnosis of certain "critical" illnesses. The illnesses covered, and their required severity varies between the companies, but all cover an agreed core list. It can be standalone or as an add-on to any of the above schemes.
Example premium for standalone critical illness
| Joint life, 35 next birthday, non smokers |
£36.30 per £100,000 |
Example premiums for combined life and critical illness level term assurance
| Joint life, 25 next birthday, non smokers |
£19.50 per £100,000 |
| Joint life, 25 next birthday, smokers |
£30.10 per £100,00 |
| Joint life, 35 next birthday, non smokers |
£38.90 per £100,00 |
| Joint life, 35 next birthday, smokers |
£69.80 per £100,000 |
| Joint life, 45 next birthday, non smokers |
£96.50 per £100,00 |
| Joint life, 45 next birthday, smokers |
£186.40 per £100,000 |
Terminal Illness Benefit
On diagnosis of a terminal illness (where your life expectancy is less than 12 months), the life cover (sum assured) will be paid out immediately. It would not be paid out if the diagnosis were within 18 months of the end of the plan. This option is included free in term assurance policies.
Options
Premium Frequency
Choose if you would like to pay your premiums monthly or annually.
Term in Years
Choose how long you wish the policy to cover you for.
Sum Assured
This will be a lump sum for a Level or Decreasing policy or an annual amount for a Family Income Benefit policy.
Waiver of Premium or Premium Protection
If you choose this option the premiums can be waived during incapacity or illness exceeding the deferred period.
Increasing Benefit
Choose this option if you would like the sum assured AND premium to increase annually in line with inflation.
Guaranteed / Reviewable
Reviewable policies have premiums which can alter at the review dates within the policy term (usually every 5 years). If you want to be certain that your premiums stay the same throughout the policy, choose Guaranteed.
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