In our CeMAP course we cover different areas of financial advice, which includes mortgages, insurance, investment, pension, tax. I would like to share one article from my workbook on insurance. This article is about Level Term Assurance.Clients normally arrange a level term assurance policy to protect their interest only mortgages, but this is not the only reason for arranging level term assurance.
Key points about this protection policy are below.
Level Term Assurance
* We can connect a Level Term Assurance to protect an interest only mortgage.
* It is a pure protection policy.
* Claim will be paid only in case of death either because of an accident or an illness.
* Level Term Assurance will pay a lump sum payment in case of death.
* Premiums are paid monthly or annually.
* Premiums can be guaranteed or reviewed.
* Term can be anything from a few months to say, forty years or more.
* If the life assured survives the term, the cover ceases and there is no return of premium.
* There is no cash value, no surrender value and no maturity value for term assurance.
* If the premium is not paid within the period of time normally 30 days, the policy will lapse.
* Reinstatement will usually be allowed within 12 months, provided all outstanding premiums are paid and evidence of good health is provided.
* Some assured remain constant throughout the term.
* The benefits are free for income tax.
* The proceeds of the life policy will become part of the deceased person estate (unless written in trust) and may be subject to inheritance tax.
* There is no tax relief on the premium paid unless pension term assurance was taken before December 2006.
I am available to answer any questions or comments you might have about this policy.
Munawar Ahmad Malik