Term assurance is a comparatively cheap and basic form of insurance.
It pays out on the death of the life assured, nothing else. There is no investment element at all.
But, of course, the death of the life assured must occur within the term itself.
Term assurance is not only useful for family protection in the event of the death of the breadwinner.
It can also be used in business, for example, to protect a company should a key employee die, whose death might have an adverse effect on profits. This is known as key person insurance.
Term assurance is also useful in partnership situations, where if a partner dies, the other(s) can use the money to buy his/her share of the business.
Term assurance affords a fair amount of flexibility with regard to the term itself, which can vary from a few months to a few tens-of-years (10 years, 20 years, 30 years and more).
However, when the term ends the life cover stops. Premiums, of course, are non-returnable. There is no cash or surrender value involved with this type of policy.
