Purely for your peace of mind

Term assurance is best used when taking out a loan or mortgage to provide a capital sum

WHEN most us talk about life insurance, we usually mean with-profits endowment policies. Many people don't realise these are a conservative form of investment, writes Tony Lyons.

We pay our premiums on a regular basis, expecting after 10, 15, 20 or 25 years to collect a lump sum made up of the sum assured - the minimum guaranteed to be paid on premature death - and the bonuses that have been attached to the policy over the years.

There are better ways of building up a nest egg and you can buy life insurance that offers pure protection, with no investment element at all. The premiums are much cheaper than they are on with-profits policies. Called term assurance, these policies will give no pay-out at all except in the case of death. If you survive to the end of the term, you get nothing back except the satisfaction that your family and dependants would have been protected against financial hardship if you had died.

Term assurance is best used when taking out a loan or mortgage to provide a capital sum. Or it could be used just for peace of mind. To give an idea of cost, a 30-year-old male non-smoker could expect to pay around pounds 5 and pounds 7 a month for a sum assured of pounds 50,000 over 20 years with level- term assurance.

Women have a longer life expectancy than men, so pay less - between pounds 4 and pounds 6 a month for the same sum insured. Premiums increase significantly with age. A 50-year-old male non-smoker should expect to pay between pounds 16 and pounds 22 for the same sum assured over 10 years. A woman should expect to pay pounds 4 to pounds 5 a month less.

Some of the most competitive rates are offered by Equitable Life, which is usually the cheapest company in the market, Eagle Star, Legal & General, Scottish Widows, Virgin Direct and Standard Life.

The market for term assurance is competitive and premiums fluctuate. An independent financial adviser will tell you the best rates, or check the papers for low-cost firms that sell insurance direct to the public.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific