Term death insurance is a life insurance contract but it is not subject to the same rules as “savings type” life insurance contracts (life insurance contracts or mixed life insurance contracts ). This type of contract is not redeemable during the contract. Moreover, if your death occurs after the end of the contract, the insurer will not pay funds to the beneficiaries. Discover in our section all the characteristics of a term life insurance policy.
What is a term life insurance policy?
A term life insurance contract is a specific form of a life insurance contract by which the insurer undertakes to pay one or more designated beneficiaries (ies) a lump sum or an annuity (the amount of which is set upon subscription) in the event of the death of the insured during the term of the contract.
A temporary death insurance contract is a so-called non-refundable contract: if the insured survives at the end of the contract, the insurer retains the contributions.
Generally, this type of contract covers the death of the insured, whatever the cause.
Please note: some contracts provide, however, that the insurer will pay the benefit only when the death is accidental: they are often called “accidental death insurance contracts”. For more information: Accident Guarantee Insurance
Unlike a life insurance contract (life insurance or mixed contract), in a term life insurance contract:
- there is no constitution of savings by the subscriber.
- the amount of the capital is fixed at the time of joining: it is fixed and may prove, depending on the amount and duration of payment of the contributions, to be less than the total of the premiums that will have been paid.
- the amount of the contributions paid depends in particular on the amount of the guaranteed capital. It can be fixed or changed, for example, depending on the age of the insured. In the event of non-payment of contributions, the insurer may terminate the contract.
- the subscriber does not have a right to redemption.
To note :
– Temporary death insurance contracts often provide additional guarantees to the death guarantee such as temporary incapacity for work (ITT), invalidity, Total and Irreversible Loss of Autonomy (PTIA) or Absolute and Permanent Disability (IAD) guarantees. In this case, these contracts are called “provident contracts”.
– There are other insurance contracts in the event of death: life-entire death insurance contracts (in this case, the insured is covered regardless of the date on which he dies).
Please note: the death benefit will not be paid in the event of the insured’s suicide during the first year of membership, except in certain cases in the case of a collective contract with compulsory membership taken out by an employer.
Definition: who are the subscribers, members, insured, and beneficiaries of a temporary death insurance contract?
- The subscriber or member of a temporary death insurance contract is the person who concludes the contract with the insurer (individual contract) or who adheres to the collective insurance contract subscribed by a legal person (for example an association or an employer ) with the insurer.
- The insured is the person on whose head the insurance rests. The insured person of a temporary death insurance contract cannot be an adult under guardianship (except in the context of a compulsory collective contract taken out by an employer) nor a minor under 12 years of age.
- Please note: in contracts other than collective with compulsory membership taken out by an employer, if the subscriber of a temporary death insurance contract is different from the insured, the latter must consent to it in writing (with an indication of the capital or annuity initially guaranteed). Otherwise, the contract is void.
- The beneficiary is the person designated by the subscriber to receive the capital or the annuity provided for in the contract in the event of the death of the insured. If the subscriber is different from the insured, the appointment can only be made by the subscriber with the consent of the insured.
- Please note: the beneficiary clause must be drafted with care. The terms used in the clause can have a major impact on how the death benefit will be allocated to the designated beneficiaries. An imperfectly drafted beneficiary clause could thwart your intentions.
What happens at the end of the term life insurance contract?
The term of the temporary death insurance contract is determined at the time of subscription:
- If the insured is alive at the end of the contract, the contributions paid remain with the insurer. We are talking about a non-refundable contract, the subscriber does not recover the contributions he has paid.
- If the insured dies during the period of validity of the contract, before the end of the contract, the insurer pays a lump sum or an annuity to the designated beneficiary(ies).
