Term assurance is a life assurance policy that runs for a specified period of time. Payouts from term assurance are free from Income and Capital Gains Tax and will only be paid out to the estate or beneficiaries if the life assured dies within the policy term.
Level Term Assurance
This is a long term insurance policy which pays out a guaranteed lump sum if you die within the policy term. The period over which the policy will run is set at the start of the policy and when the set time is complete, the policy will expire.
Decreasing Term Assurance
Similar to level term except that the sum assured decreases throughout the term of the policy. The rate of decrease assumes an interest rate on a related mortgage of 10% and the policy ceases when the sum assured reaches zero.
Terminal Illness option
Both policies have a Terminal Illness Option which, if selected, will pay out the total sum assured if you are diagnosed with a terminal illness and there are more than 18 months remaining until the policy expires. Once a payment has been made under this option, the policy ceases.