There is nothing you are able to do about death. When your time comes it happens, and nothing changes that, it is a fact of life. However, you are able to do something when it comes to leaving your family with financial security when you are gone – and one way is by term life cover.

Term life insurance may be taken out in the form of decreasing term or level term cover. The type of insurance which is the most suitable for your circumstances depends on the type of financial security you wish to leave your family.

Life insurance to protect your mortgage
If your main worry and consideration is the outstanding mortgage, then you may wish to take decreasing term insurance. This form of insurance – also known as mortgage protection life insurance – typically covers your outstanding mortgage balance in the event of your death.

When taking out decreasing term life cover, the amount you insure your life for (the ‘sum insured’) is usually the amount left to pay on your mortgage. The term of the policy – ie how long it lasts – is typically the amount of years left to pay on your mortgage.

As you continue to pay off your mortgage, the amount left owing reduces and so does the amount of the sum insured. Providing you continue to pay your life insurance premiums over this time, if you die within the policy term, the sum insured goes towards clearing your outstanding mortgage balance. This means that your family have the security of their home, with no mortgage repayments to worry about.

Life insurance for general financial security
If you wish to take out life insurance to cover the general future financial security of your family in the event of your passing, you may want to take level term life cover.
Level term insurance allows you to choose the length of time that you want insurance for and the amount (both up to set age and amount limits). It does not have to match the outstanding mortgage balance, it can be whatever amount you think that your family will need in the event of your death. When taking out this form of insurance you have to consider many factors such as any debt you have, children, day care costs, health costs, college or university costs, and the rate of inflation.

If you pass away during the term of your insurance, your loved one receives the sum insured. This sum remains the same throughout the term of your policy and does not decrease. However if you outlive your term life cover there is no payment and the policy simply lapses.

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