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For many people a specific term may be suitable and this may coincide with a mortgage term or the length of time that children will remain financially dependent. A required lump sum will be agreed upon and the appropriate term allocated with the benefit written on a single life or joint life first event basis. The choice of sum assured may reflect the level of debt being protected or a replacement of income. If it is to be a replacement of income, indexation of the sum assured is likely to be considered to keep pace with inflation Term assurance can be written on a level, increasing or decreasing basis. A level sum assured can be used to protect a specific non reducing debt such as an interest only mortgage and an increasing sum assured, as mentioned above, is likely to be used when protecting increasing future earnings. Decreasing term assurance is most commonly used to protect a repayment mortgage.
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