Term Life Insurance

Here are brief outlines of the different types of term life insurance:

Single or joint life.
Term life policy can be fixed to ensure pay out on the death of a single life insured. Many couples prefer life cover as a form of financial buffer if either one of the couple dies. The term life is then arranged to pay out if either one dies. Policies can be arranged to pay out on either the death of the first person or to pay out only when both parties have died. It is now more common for these policies to be automatically worded to pay out on the death of the first person. Check this point before you purchase the policy.

Decreasing term.
With a decreasing term the sum insured decreases over the period of the term of the insurance policy. The rate of decrease is usually fixed to some other object such as the decreasing outstanding balance of a mortgage repayment. In fact, this type of term insurance is generally used to cover repayment mortgages.

Level term
Level term life cover has a set fixed sum insured which remains constant over the period of the term.

Variable premium or guaranteed premium.
Premiums increase according to your age. Some policies are written so that when you pass a certain age the premium increases relative to that age. This may be useful when you start the policy because the initial premiums will be lower. Policies can also be written where the premiums remained fixed. The premium will be higher at the policy start date but it never increases.

Written in trust or not in trust.
The starting point is that the policy will not be written in trust unless you request it to be written in trust. When the life insured dies, the policy, if it is not written in trust, will form part of the dead person's estate and be added to other estate values when death duties are considered. If however the policy is written in trust, then it is assumed to have been for the benefit of the beneficiaries of the trust and this can avoid death duties. Because this involves tax and trust laws it is not appropriate to discuss it here. But you should be aware of it and you may wish to consider it.