Insurance

Question 1

What is level term insurance?

Answer 1

Provides tax free lump sum payout
Joint/single life
Cheap, around £9 per month for £100000 payout

Question 2

What is decreasing term cover?

Answer 2

Reduces every year until nil at end of insured period
May be useful for mortgage cover
Cheaper than level term

Question 3

What is family income benefit insurance?

Answer 3

Provides fixed or increasing tax free income from death to end of insured period
Cheaper than level term insurance

Question 4

Whole life plan insurance?

Answer 4

Much more expensive than other types of life assurance
Combines insurance with investment in a pooled fund
Often linked “with profit” returns

Question 5

What is an endowment plan?

Answer 5

Part of monthly payment is used to buy life assurance depending on your age, sex, and how long the endowment period
The rest of payment is invested either on a with-profits basis or a unit-linked basis. The size of the lump sum you get at the end of your endowment often depends on the performance of these investments.

Question 6

What type of life assurance is there?

Answer 6

Level term
Decreasing term
Family income benefit
Whole life plans
Endowment plan