By the time we reach Third Age our insurance needs will be changing, policies may be maturing and ending so we should look carefully at continued protection.

That vital protection is harder to find as we get older. It is more costly and there may be health issues which affect the premiums.

The simplest form of life insurance is called Term Insurance and does precisely what it says on the packet – it protects you for a chosen term.
That term may be linked to a mortgage, in which case it is possible to take out reducing term insurance. This means the sum assured lessens with the debt and so consequently do the premiums.

I would think very few people, at any age, are adequately insured. I spent time working for The Prudential and wished I had a pound for every time I heard the phrase: “I have plenty of insurance.” Few people have enough.

Under the Financial Services Act I have to say that you should take the advice of a professional advisor over financial and investment planning details, but term assurance is an exception.

You can buy it yourself on the Internet and it should be the very first thing you do buy. It is only payable on death and a small premium buys a much larger sum assured than other policies.

Try this exercise. Add up all your mortgages, loans and other debts. Add to them your salary or other means of income, having first multiplied this by the number of years you would expect to live under normal circumstances. If both of you earn from different sources include those. Got that?

It will be a frightening figure but then answer this question. If you had died yesterday how would your partner cope today? Sobering isn’t it? But the figure you should really be insured for is the sum of all those factors. I doubt you are!

So, now I’ve cheered you up, what can you do about it? It depends very much on age, health and, of course, that old chestnut, smoking.

Let’s look at the different types of term assurance:

Level Term Insurance will pay out the same amount during the term of the policy upon death of the insured. There are no bonuses attached to term insurance and it has no maturity or cash-in value.

Reducing Term Insurance I have already mentioned.

Increasing Term Insurance is useful even if it only increases the premium and sum assured annually.

Convertible Term Insurance is something I highly recommend. It begins as straight term assurance but you have the option of converting it to “whole of life” or endowment policy, which will have a maturity value. This can be done at any time during the term of the policy and, most importantly, this can be done without further medical evidence or examinations.

You can also do Annual Renewable Term Insurance. This can be useful because you review it each year and premiums tend to be cheaper because there is far less probability of the assured dying within a year than a longer period.

If you are still working and paying into a private pension fund you should also look at term assurance linked to the pension for you will receive a tax allowance not just against pension contributions but the life cover as well.

That is the “simple” form of insurance. It is the cheapest, certainly the most important and you should consider nothing else in the financial world without it.

Graham Smith for Third Age.