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Term Assurance
Life Insurance

Term assurance is the simplest and cheapest form of life insurance, and provides cover for a set term (for example until a loan is repaid). Should you die within the term, the policy will pay out either a tax-free lump sum, or a tax-free income until the end of the term. Term assurance does not include an investment element; therefore if you don’t die within the term, you will not receive anything back.

Life Assurence

There are pros and cons when deciding whether the policy should pay out a lump sum or an income. A lump sum can often be more flexible, while a policy providing an income is often cheaper, since the liability to the insurers is constantly decreasing (for example, if you were to die on the 18th year of a 20 year policy, the insurers would only have to pay out two years worth of income).

Term assurance policies can either be level or decreasing. With level term assurance, the amount paid out will be the same, whether you die on the first day of the policy or towards the end. With decreasing term assurance, the amount paid out towards the end of the term will be less than at the beginning.

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