Jargon Buster - Definition of Term Life Insurance

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Term Life Insurance

is an insurance policy that pays out a lump sum in the event of the death of the life assured during the term of the policy. Cover is provided for a fixed number of years and if a claim is not made during the term, the policy will cease and no benefit will be paid.

Term policies have no maturity or surrender values.

Term life insurance is a cost effective way of providing financial security for a set number of years. Often term policies are chosen to cover the value of the mortgage or to provide funds for family members in the event of the death of the insured. Term policies are often far cheaper that whole life policies and endowments as they only cover a number of years and do not have an investment element.

Term life insurance often refers to a level policy whereby the sum assured remain the same throughout the term of the policy.

Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

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