LIFE ASSURANCE POLICY

Most life policies are single life policies i.e. policies with only one life assured upon whose life the policy depends.

There are three different classifications of life assurance policy namely:

Term Assurance
Whole life

Endowment

TERM ASSURANCE

This consists of policies, which are taken out as a means of insuring against the possibility of death within a specific period. The premiums payable are solely for the purpose of providing life cover as a form of protection.

Term assurance is the most basic form of life assurance.

WHOLE LIFE POLICIES

A Whole life policy pays out a sum assured whenever the life assured dies. It is a permanent policy, not limited to an expiry date as is a term assurance.

Whole life policies can often be used as security for a loan, either from the life office or another lender.

Examples of Whole life policies are as follows:

NON – PROFIT WHOLE LIFE POLICIES

This is a policy that has a level premium, payable throughout life. It pays only a fixed sum assured, whenever death occurs.

WITH – PROFIT WHOLE LIFE POLICIES

These policies are almost the same as non – profit whole life assurance, the only difference being that the amount payable on death is the sum assured, plus whatever profits have been allocated up to the date of death.

ENDOWMENT POLICIES

This is the third basic type of policy. Here, the sum assured is payable on a fixed date (the maturity date) or on the life assured’s earlier death. The standard non – profit endowment assurance provides a level guaranteed sum assured on death or maturity.

Endowment assurances have cash – in (surrender) values and can be used as security for loans, either from the banks or building societies.

The best yield on an endowment policy is always obtained by waiting until the maturity date.