We recently noted the growth of the “protection gap” where the amount of critical illness, life assurance and income protection which people carry is falling, as compared to the amount of financial liabilities such as mortgages loans and their family commitments. 

Now it seems life insurance companies and other providers are attempting to revive the market.  They are doing this by new initiatives such as launching products that offer more flexibility on premiums and giving scope for policyholders to protect against sharp rises in mortgage rates.  In addition we have seen numbers of insurers reducing premium rates for these products, passing on savings they have made in administration and underwriting efficiencies.

Term assurance is the name for life cover that is in place for a set term, most often the length of a repayment mortgage or other commitment. The policies pay a cash lump sum, typically covering the outstanding mortgage debt, if the borrower dies within the term of the policy. 

As we mentioned last week sales of this form of cover have reduced in the recession and the slump in new mortgage loans and as a consequence have arguably made this one of the best times to review your protection cover in many years.