REDUCING TERM

This is the most common type of life insurance sold. What it means is that the amount of insurance cover provided (i.e the sum assured) decreases constantly in line with the balance of the loan it is taken out against.

In the case of a claim following death of the life assured, the policy would only pay the bank the balance they are still owed on the loan.

It’s important to note that in this type of policy, no payment is made by the insurance company if the life assured survives the duration of the policy.

LEVEL TERM

With this type of cover, similar to reducing term policy, a claim payment is only made in the event of death of the life assured.

The difference here is that the sum assured remains constant throughout the duration of the policy. In the event of a claim following death therefore, the bank or lending facility is paid its dues, and the balance of the sum assured is paid to the legal heirs or the beneficiary mentioned in the policy or proposal form.

It’s important to note that in this type of policy, as per the Reducing Term policy, no payment is made by the insurance company if the life assured survives the duration of the policy.

ENDOWMENT ‘WITH PROFITS’

With this type of policy, you are buying a generally smaller amount of life insurance, a lower sum assured, but you are also building up profits on your premium.

Typically, positive results are obtained five years or more after commencing cover, with profits increasing thereafter.

A detailed quotation for this type of policy will generally show the estimated interest rate throughout the duration of the policy, normally giving three levels of interest rate, from pessimistic through to optimistic. Cancelling, or ‘surrendering’ the policy before the maturity date (the expiry date) normally results in the total profits being reduced substantially and it is therefore advisable to let the policy run to maturity in order to obtain the maximum benefit.

INVESTMENT BONDS

These are generally in the form of a single-premium interest-sensitive endowment policy.

Most providers of this type of cover guarantee a minimum interest rate on the premium invested. The actual investment is at times higher than the minimum guaranteed rate. Annual bonuses are generally declared by the company and are normally added to the account for the duration of the policy.

These bonds normally also contain life cover for 100% or 101% of the account balance at the time of death.

RETIREMENT PLANS (SECURE SAVINGS PLANS)

These are plans where monthly payments are made to the insurance company, with bonus or interest rates being applied to the account balance.

There is a minimum amount which can be paid and the product also allows for one-off top-ups to be paid in as well. There is normally a minimum guaranteed bonus rate applied. Think of this product as a ‘minimum monthly payment savings account’.

Protecting the people you care about is extremely important. That’s why it’s always a great idea to seek out some form of life insurance policy so that come what may, you know your loved ones are secure. We can search the market for the best policy to meet your financial requirements and your main goal.

The best way to understand the insurance cover that you require is to talk this through with us. You can contact us by clicking here.