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Product Class Advice – Term Life (Part 2)

The most well-known form of risk insurance is life insurance.

Term Life provides a lump sum benefit payable to the policy owner upon your death. When the benefit becomes payable, it is normally paid to your dependents or your estate. Some policies will also pay the benefit on diagnosis of terminal illness.

This lump sum could be used to pay back debts and/or provide a lump sum that can be drawn upon to create income, and so help your family maintain their current lifestyle. In addition, it will help you keep your family’s plans on track and pass on an investment asset to your family. The most popular form is yearly renewable term, meaning that the premium is calculated each year and will normally increase as you get older. The premium is charged each year taking into account your age, gender and smoking status.

This form of insurance is flexible in that the sum insured can be altered to suit your financial circumstances without incurring any financial loss. Most forms of yearly renewable term are guaranteed renewable. This means that it can be renewed automatically irrespective of the status of your future health. However, the company can change the table of rates at any time unless the company offers a rate guarantee for a specified period from commencement.

Generally term, TPD and trauma insurance premiums are not tax deductible. However, when a claim is paid the benefits are not subject to tax.

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