Term Insurance or Assurance:

This is the simplest and cheapest type of life insurance, and is known as term insurance because you choose how long you're covered for, say, 10, 15, or 20 years (the term).

It only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out on the first death only during the term.

There are different types of policy you can have:

• level term where the benefit remains constant throughout the arranged term
• family income benefit (a policy which pays out income rather than a lump sum)
• increasing policy (where cover and premium rise over the years)
• decreasing policy (where cover and premium fall over the years)
• renewable policy (which lets you extend the original term)

Decreasing term insurance is often linked to a repayment mortgage (where the amount you owe decreases over time) and may, in this instance, be called mortgage term insurance.

The premiums you pay are usually fixed for the whole term. There are also contracts where premiums are reviewable after a certain period, usually five years.

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