Term life insurance is the simplest and purest form of life insurance: the policyholder pays a regular premium, and if the insured dies during the term, the insurer pays the sum assured set out in the policy to the beneficiary. There is no savings element, no investment – just protection, sized to the family's needs.
- Pure protection: a set amount for a set term – with no savings element, so a relatively small premium can buy substantial cover.
- The payout goes to the named beneficiary and typically falls outside probate – so it tends to reach the family faster.
- The cover amount isn't a guess: we calculate it from the mortgage repayment, the family's expenses and its plans.
The four basics: amount, premium, term, parties
The heart of the policy is the sum assured: this is what the insurer pays if the insured event occurs. The premium is its price – it depends on age, health, the amount and the term. The term tells you how long the protection lasts: typically for as long as someone relies on your income – a young child, a mortgage, shared plans. The parties: the policyholder pays the premium, the insured is the person the policy covers, and the beneficiary receives the payout – for the details, see who's who in the policy.
Why is it such a powerful tool?
Because it fixes an imbalance: the family's expenses – mortgage repayments, bills, school – keep coming even if the earner's income is lost. Term life insurance – from the start of risk cover, taking into account the waiting periods and exclusions set out in the policy terms – typically provides the full sum assured as early as the start of the policy, in contrast to savings, which take years to build up. Because the premium carries no savings element, its "leverage" is remarkable: a small, predictable monthly amount can buy cover that is many times the family's annual expenses – we won't responsibly quote a specific premium here, since it depends on several factors and only becomes clear from competing offers from several insurers.
What happens if nothing happens?
With pure term life insurance, there is no payout at the end of the term – just as home insurance doesn't refund the premium if there was no claim. That isn't a flaw; it's the point of the design, and exactly why it's affordable. Anyone who also wants to save is typically better off keeping protection and savings deliberately separate – for the comparison, see the decision map.
How does the policy start, and how does it live on?
The process of taking out cover: assessing your needs, sizing the cover, comparing offers, health underwriting, and issuing the policy. After that, the policy lives on alongside the family: if it is warranted, or you ask, we adjust the amount and the riders to fit your life situation – the mortgage shrinks, a child is born, income grows. For the full process, see how it works
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