Level Term offers guaranteed financial security for your family and is one of the most straightforward types of life insurance available. If you need to make a claim, the amount payable (sum insured) will not vary during the term of the policy.
Parents, guardians or people with dependents often leave money behind to enable their family to minimise the financial impact on your family after you’re gone. This type of policy can also be a good option if you need a specific cover for an interest only mortgage that is not covered by an endowment policy.
Level Term cover will protect you and your beneficiaries for a fixed period of time (known as a term) which you can decide upon setting up the policy with your advisor along with the amount that will be paid out (known as sum insured).
The length of policy depends entirely on your preference and is usually taken by a family who wishes to give support until a particular moment in life. For example, until your mortgage is fully repaid, your children turn 18 or 21 or until you retire.
Through paying a monthly premium for your cover, if you pass away within your chosen time period, you will have peace of mind knowing that your family will be supported financially through a fixed lump-sum payment. If you don’t claim during the term it will lapse, meaning you’ll need to take out a new policy for additional life insurance.
Mortgage Life Insurance is also known as Decreasing Life Insurance. As its name suggests, this policy pays out an amount that reduces over time. So as you start to repay your mortgage, the amount of cover also reduces.
If you were to pass away five years into your mortgage, your repayment would cover the outstanding debt. But if you had paid repayments for twenty-five years, the pay-out would be lower as your mortgage also be smaller.
Please note that the descriptions above do not constitute as financial advice and may change dependent on individual circumstances and budgetary requirements.
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