Known as ‘Term Assurance’, the core idea of this product is very easy to understand. The policy holder pays the life insurer a fixed premium for a certain period and should the insured person pass away within this time, the policy holder, a pre-nominated person or the insured person’s legal heirs are paid the agreed capital payment.
Should at the end of the contractual period the insured person still be alive, the invested money is lost.
In its basic form, term insurance is the most inexpensive way to receive larger capital payments in the event of somebody’s death and, regardless of the relationship, any person can be insured providing that they give their permission in form of a signature on the application.
Commonly, people purchase insurance against their death once they need to financially secure their beloved ones, hence shortly after starting a family and very latest once the first child is born. Other reasons are to secure a mortgage, business loan or a key person in a corporation.