Basically, life insurance policy can be classified into two important categories:

1. Term Life Insurance 2. Whole Life Insurance

Both of these policies are specially meant to provide coverage to individuals. In this section, we will concentrate on studying Term Life Insurance Policy in the UK in detail.

Term Life Insurance policy in the UK is a type of life insurance policy, which provides protection to an individual against death for a specific period of time, or the tenure of the policy. It is also referred to as a pure protection policy.

In other words, it insures a benefit upon the insureds death, provided that the death occurs within the tenure of the policy. Thus, it has a set duration limit on the coverage period. Therefore, it is also regarded as Temporary Insurance.

Once the policy expires, it depends upon the sole discretion of the policyholder to either renew it or terminate it.

It should be noted that the policy does not provide any returns beyond the amount stated when the policy was taken, and that it does not build any cash value.

However, it offers full guarantee of the premiums. That means if one dies while ones policy is in effect and all of the required premiums have been paid up to that point, one s recipients would receive exactly the benefit amount that has been opted for while taking the policy.

Features of the UK Term Life Insurance Policy

Let us have a look at some of the salient features of this policy:

• Level
  In this policy, the annual premium paid by the insured remains constant throughout the year. The face value of the policy also remains constant throughout the year. The maximum limit of term of policy is 30 years.
• Convertible
  The insured has an option to convert the policy from temporary to permanent life insurance, before the policy collapses. But, the premium amount is subject to increase at the time of converting the policy into permanent life insurance.
• Renewable
  This policy can be renewed by the policyholder only up to a specified age limit (typically age 65 or 70). In addition, proper medical examination is required for the renewal to take place. For example a 15-year policy can be renewed for another 15 years. This will be discussed in greater detail further .

UK Policy Mechanism

There is no need to get worried about how this kind of policy actually works ! A few steps listed below will probably reduce your anxiety to some extent :

• Term life insurance offers coverage for a specified period of time, usually 1 to 30 years. Most commonly, individuals insure for a term of 10, 15, 20 or 30 years. These policies are the most inexpensive form of insurance.
• Thereafter, if the holder or the beneficiary dies within the term or tenure of the policy, his dependents or representatives get paid the stated amount. For example, in a term policy of 15 years and a face value of $50,000, if the insured dies any time during those 15 years, his family representatives are entitled to full payment of $50,000.
• In case if no such death occurs by the end of the policy, the insured will not be entitled to such death benefit. But, he can also renew the policy on his own sweet will.

Theory of Decreasing Responsibility

The term life insurance policy is purely based on the theory of decreasing responsibility. This insurance policy provides protection to all the temporary financial responsibilities of the insured, and thereby, reduces the burden from his shoulders. Thus, in a way it washes away the entire burden of the insured and is, therefore, called a temporary insurance.

Term life insurance policies propose a conversion privilege for a definite period of years. This permit the insured to convert his term policy into a permanent insurance policy regardless of health state at the time of conversion. In this way an insured can obtain the required coverage for his family, and would also enjoy the tax advantages of a permanent insurance policy as cash flows rise.

Annual Renewable Term

In this form of policy, the premium is paid for one year of coverage, but the policy guarantees to continue each year for an agreed time period. This period may vary from 10 to 20 years, or rarely until age 95. In an Annual Renewable Term policy, the premium is slightly higher than the normal coverage, but the insured is more likely to have the benefit paid. Thus higher rates of premium are worth it.

Usually families, which are burdened with large financial obligations, can benefit to some extent by taking this policy. Since term life policies offer quite low premiums, this would probably enable young families to buy adequate coverage to guard against loss of revenue.

If someone were looking for a Term life insurance policy for more details on the Internet, the web would display a variety of life insurance sites.

There are four common types of life insurance websites:

• The first type asks for the personal information of the user. This information is later sold off as a lead to insurance agents.
• Some sites sell insurance directly, but again before doing that, they ask for the personal information details of the user, which includes name and e-mail address and then they give a quote.
• The sites of Insurance companies quote their own rates. At times, they also provide a few references of their agents to the user.
• < There are only a few sites that explicitly allow to access the database of life insurance rates anonymously. In the event that a user finds a policy that he would like to opt for, he may contact the company or agent on the mentioned address or contact numbers.

Advantages of this policy
The Term life insurance policy enjoys the following benefits:

• This policy affords buying power for a larger amount of protection.
• It provides pure insurance protection. It does not insist on savings element to the individuals. Its sole objective is to pay a death benefit to the recipient.
• Having considered the most affordable life insurance, one can enjoy more coverage out of this policy.
• It provides the most simplest and effective coverage for from one to 20 years or longer.
• It is easily renewable.
• It is based on a set period of time, and thus, covers the years of earning of the insured.
• The policy saves money and allows for a larger death benefit by charging for the cost of insurance only.

DRAWBACKS OF THIS POliCY

Though this insurance policy provides certain benefits, it also suffers from a few drawbacks:

• The policy does not provide a cash value.
• It does not offer permanent life insurance protection.
• As the insured gets older, the premium increases or becomes costly.

Term life insurance policy in the UK is a need-driven insurance policy, as it accustoms to the temporary needs of an individual, which keeps changing from time to time. Thus, even if this policy suffers from certain limitations, it also provides wide protection to the ever-changing needs of individuals. Nonetheless it is always advisable to carefully evaluate any policy, be it term life, whole life, group life, and so on, before applying for it.