Life insurance policy will pay out a specified amount of money when an insured person dies or is diagnosed with terminal illness (an incurable disease that will make impossible to live longer than 12 months)
The main aim of the policy is to provide your family with financial stabilization after your death.
Clients often decide on taking out life policy at the time of mortgage contract. In most cases the sum assured and the term of the policy corresponds with the amount and length of the mortgage. People who want to take out the insurance may choose between the policy with decreasing amount (decreasing term assurance) and the policy with a fixed amount (level term assurance).
- Decreasing term assurance
Decreasing term assurance is the most suitable form of protection for the repayment mortgages. Your sum assured decreases along with your mortgage. This has proven the most cost effective solution for mortgage protection.
- Level term assurance
Another type of life insurance policy is level term assured. The amount for which you are insured is the same throughout the term of policy. This type of product is recommended to those who have interest only mortgage or would have a need for additional family protection. In addition those policies can be linked to particular index such as Retail price index or rate of inflation which means that the sum assured would increase every year in line with the specified policy index.
As with all insurance policies, conditions and exclusions will apply.