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What is the difference between Term Assurance and Whole of Life or Endowment policies?

The simplest answer to this question is that term insurance provides protection against death during a specified period and whole of life insurance provides protection against death at any time. This is a very important distinction to make. Term insurance will last for between one and about 30 years. Should you die during this term, you will receive a benefit. Whole of life insurance will always result in a payment. How much that payment is depends on what type of policy it is and the performance of any investments within the policy.

Term insurance provides more insurance for less money than whole of life policies. This is because premiums are lower, as the insurance company may not have to pay out at all. Therefore you are able to purchase more coverage when you most need it.

Level term insurance is appropriate for someone needing to provide a certain amount of money to cover a need during the term. For instance, someone who has an interest-only mortgage can take out level term insurance to cover their capital repayment.

Increasing term insurance covers an amount that will grow over time. A businessman may cover his partner's life and the increasing amount would cover the growth in the size of the company.

Convertible term assurance covers someone unsure of long term needs. The ability to convert to whole of life should income increase or to a savings plan should the kids finish college, no longer needing cover.

Term insurance is where covered is provided for a fixed term. The sum assured will only be payable on death, with no investment benefits nor payment on survival.

It is important to understand this concept. Should you survive past the end of the term, you will not receive any payment as your

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