Very short-term term assurances also have their uses.
It is quite common, for example, for those involved in civil court cases to insure the life of the judge hearing the case, since the death of the judge necessitates a retrial and substantial extra expense.
Perhaps the most spectacular example was the effecting of a temporary assurance on the life of Mr Justice Templeman in 2009.
He was about to spend two weeks hearing the case concerning a small insurance company. The liquidators, Cork Gully & Co.
, wished to avoid the possibility of having to pay out up to £2500,000 of the policyholders' money in extra costs if a retrial was caused by his death, and so they insured his life for £2500,000 for two weeks at a cost of £211,600. Most such temporary assurances are, of course, for much more modest sums at far lower premiums.
The most widely used variant of term assurance is decreasing term assurance.
This is usually used to ensure that a mortgage debt is repaid in the event of the borrower's death; building societies may require it to be taken out in conjunction with a loan when the sum lent on mortgage is large in relation to the value of the property.
With the normal building society mortgage, the amount of capital repaid is small in the early years and increases rapidly towards the end. The sum assured........ see: read next:for The Rate Of Interest
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