Increasing Term Assurance

An Increasing Term Assurance policy will increase the 'sum assured' (the cash amount that you receive upon your death) by 5-10% each year to reflect the rate of inflation. The reason for this is that if you take out a life insurance policy at the age of 30, and then live for a further 60 years, the amount of money you originally thought would be sufficient to support your family would no longer be enough. An increasing Term Assurance policy means that the cash payout is still a large enough amount to be of use to your family.

Increasing Term Assurance is not as common a Life Assurance product as it was in the past, and you may find that in the policies available there may be restrictions to the increases you will receive on the sum assured. This usually means that the cover will stop increasing beyond a certain age, because this makes the policy less financially viable for the insurer. If you are concerned about the rise of inflation and you are buying a policy relatively young in life, for example, just after starting a family, this may be a suitable option for you. However, it is worth noting that the cost of your insurance premium is also likely to rise to reflect the increased sum assured, so you would need to be certain that you would be financial able to support this increase. Speak to a qualified insurance adviser to get full details about this type of policy and discuss whether an Increasing Term Assurance policy is in fact the best policy for your circumstances.

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Important Tips for Buying Life Insurance

• Life 'Insurance' is different from Life 'Assurance' because it is not a certainty.  You would insure yourself against something unexpected happening, but would take out Assurance to minimise your financial exposure to something inevitable.

• If you take out any type of 'Term' insurance product, this means that you are choosing a set period of time when your cover will be active.  Beyond this period, your cover is no longer valid.

• The policy will be cheaper the less 'risky' you are to an insurer.  If you smoke, are in poor health or enjoy high-risk sports, statistically you are more likely to die, and therefore the cost of your premium will be higher.

• Joint policies for couples should be approached with a certain amount of caution.  The average joint policy pays out only after the first person dies, but for a relatively small amount more you could get separate policies with two payouts, which would have a greater benefit for your family (especially when you consider the expense of inheritance tax).