A Guide To Life Insurance - More Term Assurance Examples2 ....


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More Term Assurance Examples2...

Mr and Mrs Argent are in their early 40s and have two children aged 12 and 15. Apart from mortgage protection they have no life insurance.

To provide for his wife and family while the children are still dependent, Mr Argent takes out a 10-year FIB for £22,500 per annum at an annual cost of £233. To provide financial security for his wife, he also takes out a level term assurance for £220,000 over 20 years at a cost of £21114. The total annual cost after tax relief is £21121.27.

There are several other variations on the term assurance theme.

Normally a policy is granted on the assumption of ordinary health.

Policy proposal forms contain a number of questions about health, but, provided there is no obvious indication of serious illness or family predisposition to it, companies today tend to issue term assurance for relatively modest amounts (which today can mean £220,000 - £250,000) without making medical enquiries of the individual's doctor.

They are even less likely to require a medical examination if the "proposer" (the person wishing to take out the policy) is aged under 50, as this is a costly and troublesome business for the company.

However, the fact that the young man in particular is thus in a good position to take out a policy without difficulty does not protect him from more awkward questions in the future. A 40-year-old man whose health has not been of the best may well be required to undergo a medical examination if he wants to take out a policy, even if the same company happily allowed him to do so without one 15 years previously.

So the privilege of renewing the assurance you already have "without medical evidence" (i.e.

without the company having the right to require you to provide medical evidence or to refuse you cover because your health has deteriorated) is a valuable one.

It is sometimes incorporated in term assurance policies, especially those for the shorter terms of 5 and 10 years, in which case they are renewable contracts. The renewability option here is of almost negligible cost at a few pence per month.

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Read On: click here for More Term Assurance Information For 2013

Term assurances today may also contain an option, or more accurately a series of options, to increase the sum assured.
Thus an FIB policy for £211,000 p.a. over 25 years may allow the policyholder to increase the benefit assured up to a maximum of £24,000 per annum in four stages over 20 years, with the maximum increase at any one option date limited to the amount of the original £211,000.
Someone taking out such a policy could increase the sum assured to £22,000........ see: click here for More Term Assurance Information For 2013


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