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Term Insurance
Term insurance can also be called ‘decreasing term life cover’ . It is designed to give your dependants a payout that’s specifically calculated to help them pay off your repayment mortgage in the event of your death.
Term life insurance gets its name from the fact that it is purchased in terms, or periods of years. A period of time can range from one year up to about 30 years, depending on the company.
This type of insurance is often referred to as “pure insurance,” because it has no frills or cash savings plan. It is purchased for a pre-determined number of years, is often renewable for more terms, and the premiums are increased each time based on the current age of the insured. Premiums are level throughout each term, and the coverage remains the same. A term life insurance policy is usually convertible to a whole life policy at any time.
Over time, as you make your mortgage repayments, the amount you owe on your mortgage will gradually decrease – so your family shouldn’t need as much money to pay off the remaining mortgage. Because of this, the premiums – or monthly payments – can be lower than those on policies for level term cover.
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