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Invest & Protect LTD
45 Market Street
CH47 2BQ

Tel 0800 083 60 50
Fax 0151 632 2117


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 Convertible Term Assurance (CTA)

This is an option found more commonly on level term and refers to the ability to adapt the plan to the change in financial circumstances that clients have from the onset of the plan into the future.

First it should be noted that, due to the fact that term assurance will cease with no value at the end of its term, people consider it to be a "dead money plan" as if no claim is made the money is just lost.

The only alternative to this situation is a Whole of Life Plan as this type of plan builds up a cash value. However this plan, as a result of building a cash value, is somewhat more expensive than its term assurance cousin.

This is were convertible term assurance comes in. Convertible Term Assurance guarantees the policyholder the facility to convert the plan into a whole of life plan free of any underwriting. In some cases life companies will let you covert into other plans but generally this option is for the whole of life contract.

The benefit of this feature is simple, if you want the life cover now and are not happy with the "dead money" principle but your financial situation does not permit the additional expense at this time of a whole of life contract, then you take out a Convertible Term Assurance contract. You pay a very small additional cost to the plan but guarantee the option to convert into whole of life when the finances permit regardless of your state of health at that time.

This is quite a valuable benefit as term assurance by definition is for a specified term and whole of life assurance, is just that! Whole Of Life.

Due to the future value of this benefit the life company will only give it to people who present an application on what they class as a standard basis which means fit and healthy at the outset of the plan.

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