Term life insurance in Cyprus in 2024. A complete guide to term life insurance in Cyprus.
Term Life Insurance Cyprus
Buying life insurance can be a lifeline in protecting your partner and children from the potentially life-altering financial losses that could arise if something unexpected happened to you.
Life insurance provides a family with financial security and helps to pay for debts; living expenses; medical fees, and final expenses.
Term life is the simplest form of life insurance available in Cyprus. It is an inexpensive option to acquire life insurance benefits and still achieve your financial aims.
In this guide to term life insurance in Cyprus, we will present the structure of these policies and their main types to help you pick the most profitable plan.
Table of contents
- What is term life insurance?
- How does term life insurance work?
- Types of term life insurance Cyprus
- Benefits of term life insurance
- Term vs whole life insurance
- Term life insurance riders
- Term life insurance cost in Cyprus
- Cheap term life insurance in Cyprus
- Best term life insurance in Cyprus
- Term life insurance quotes
- Online term life insurance in Cyprus
What is term life insurance?
Term life is a temporary type of life insurance policy with a specified expiration date, e.g. 15 years from the date of purchase.
If the insured dies during this time specified period, that is the only time the death benefit will be paid out.
The death benefit is the amount of money that will be paid as a lump-sum payment to the beneficiary’s family when the insured passes away.
Term life insurance is ideal for people who want inexpensive coverage for a specific debt or situation.
For example, some people buy term life to cover their working years as income replacement for their family if they pass away, while others buy it to cover the years of a mortgage or other large debt.
There are two primary types of term life insurance in Cyprus, known as decreasing and convertible. We will explain their differences below.
How does term life insurance work?
When you buy a term life insurance policy in Cyprus, the insurance company determines the premium based on the policy’s value (the payout amount) and factors such as age, gender, occupation and health condition (past and pre-existing conditions).
For this specific process, there is a standardised application form that should be completed with the help of your insurance adviser.
If the request benefit is extremely high, or you are older than 55, standard medical exams will be required (i.e. blood tests).
The insurance company will cover the costs of these diagnostic tests even if they reject you.
If you suffer from pre-existing or past conditions, you should provide the latest or updated reports related to your condition.
The insurance underwriter will then assess your case and will decide:
- Whether your application will be accepted.
- Whether the required death benefit can be provided or decreased.
- Your premium amount.
The insurance can be paid monthly (with bank standing order), every semester or annually.
Generally, 20 to 70 years olds can be insured under term life insurance.
At the age of 75, term life insurance automatically expires. For example, if you apply the maximum duration of the insurance at 70 years old, the expiration date can be scheduled in 5 years.
A term life insurance policy does not produce cash value (i.e. it does not have a saving component).
Types of term life insurance Cyprus
Level term life insurance
Level term is the traditional level term life insurance.
The premiums and amount of coverage stay the same during a policy term regardless of the insured's age.
Decreasing term life insurance in Cyprus
A decreasing term life insurance policy is a term life contract with a death benefit component that decreases over time.
In Cyprus, decreasing term life insurance is primarily used to cover a repayment mortgage’s balance — the total balance of the mortgage gets smaller over time and will be settled in full at the end of the term.
The premium of term life insurance is constant and significantly smaller than that of level-term insurance.
Below we give an example of how decreasing term life insurance works.
Suppose you take out a €500,000, 30-year decreasing term life insurance policy to help your partner continue making your mortgage payment in case you die unexpectedly.
Your death benefit is set to decrease by 3.33% yearly for the policy's life. If you pass away after ten years, the payout would be approximately €350,000 or 30% of the original death benefit amount.
Pitsas Insurances provides an affordable decreasing-term insurance option in Cyprus.
Mortgage clients are commonly persuaded by banks in Cyprus to acquire traditional term insurance from the bank’s affiliate insurance company at a significantly higher rate.
Nevertheless, you have the right to choose any plan that is more profitable for you. You also have the right to complain to Cyprus's Commission for the Protection of Competition (CPC) if the bank threatens to increase the interest rate of your mortgage.
Convertible term life insurance in Cyprus
Convertible term insurance is a level-term contract with an added benefit known as a “conversion option”.
This conversion option allows the insured an opportunity to convert the policy cover into a new policy for a longer period without the need for a medical examination or providing evidence of good health at the time of the conversion.
This type of insurance is more costly than simple-level term insurance because the insured will not need a medical examination.
The insurance company is under obligation to continue the policy even if the insured is seriously or terminally ill.
In Cyprus, convertible term insurance is converted to whole life insurance by default.
Once converted, the insurance premium is increased significantly since whole life insurance also has a cash value component.
Aside from this change, the premium of this insurance remains stable during the duration of the contract.
In Cyprus, it is possible to activate the conversion option before the age of 60 years old.
Renewable term life insurance in Cyprus
A renewable term life insurance policy is a type of life insurance contract that can be renewed after the initial term has expired.
The renewal process allows the policyholder to extend their coverage without having to undergo another medical exam. Furthermore, the policy’s death benefit will remain unchanged.
Renewable term life insurance policies offer coverage for a set period, usually 5, 10, or 20 years. They can even be as short as a one-year contract.
Renewable term life insurance policies are beneficial because they provide flexibility and security for policyholders.
For example, if you have a renewable term life insurance with five years of coverage, when you renew it, you will have an extra five years more coverage.
Insurance companies in Cyprus do not provide renewable term insurance policies.
Term vs whole life insurance
Comparison Table
| TERM LIFE INSURANCE | WHOLE LIFE INSURANCE |
|
Coverage lasts for the length you want (5, 10, 15, 20, 30 years).
|
Coverage lasts your entire life.
|
| Inexpensive. | Expensive. |
| No cash value component. | Cash value component. |
Term Life Insurance Cyprus
Term life insurance, whole life insurance and similar contracts are the only types of insurance policies provided in Cyprus.
Their primary difference is that term life insurance provides coverage for a specified period while whole life insurance provides coverage for the lifespan of the insured.
In addition, whole life includes a cash value component while term life insurance does not, making term life more expensive.
How to choose between term and whole life insurance:
Both insurance types have pros and cons.
We recommend you choose term life insurance if the following is desirable:
- Suppose you need coverage for a specific period. A term life contract can replace your income if you pass away while you still have major financial obligations, such as paying off your mortgage or raising children.
- If affordability is a priority, term life is the least expensive insurance option, especially if you’re healthy and young.
- If you currently can’t afford whole life insurance but aspire to.
- Suppose you don’t want a cash value component as part of your life insurance. Term life is cheaper than whole life. You can save and potentially invest your money in other ways.
We recommend you choose whole life insurance if the following is desirable.
- You can comfortably afford the higher cost. You need to commit to whole life insurance for your whole life, so make sure you can afford it. Your policy could lapse, and you will likely lose money if you miss your premium payments.
- You need coverage that practically lasts your lifetime. The death benefit from whole life contracts typically pays out whenever you pass away. The payout will go directly to your named beneficiaries on your policy and not through your estate.
- You have a lifelong dependent (e.g. a child with disabilities). Life insurance can pay into a trust fund to provide care costs for your child after you pass away. Before setting up a trust, consult with an attorney and financial advisor.
- You want life insurance coverage that builds cash value that can be used as a private pension plan or rainy day fund.
Term life insurance riders
A term life rider is an optional coverage you can add to your life insurance policy for an additional cost. Riders can help cover life events that a standard policy does not.
In Cyprus, the following life insurance riders are provided.
- Accidental death coverage.
- Critical illness coverage.
- Waiver of premium payments.
- Total and permanent disability insurance.
- Income protection.
Term life insurance cost in Cyprus
Term life insurance rates are based on what you need from a policy.
The cost of term life insurance is defined by the following factors:
- Gender. Women have lower premiums than men due to their higher life expectancy.
- Age. The older you become, the higher the insurance premium will be.
- Past medical conditions. These can affect the value of the insurance depending on the severity of the condition. For example, if you had cancer in the past and fully recovered, insurance companies might refuse to insure you or raise the premium rate.
- Pre-existing medical conditions.
- Death benefit amount. It is important to note that the requestable maximum limit of coverage (death benefit) is limited by age and income. Requesting a high death benefit amount should be justified by a high income.
- Weight. In accordance with the BMI ratio, overweight people are met with increased premiums.
- Smoking and drinking alcohol regularly raise the overall rate of premiums.
- Dangerous and extreme sports increase premiums (for example, bungee jumping, skydiving, canyoning diving, and mountain climbing).
- Medical history of parents. If your parents suffer from pre-existing conditions (heart attacks, strokes, inherited diseases) or die at an early age, the insurance premium will also be higher.
- Additional benefits and coverages (i.e. riders) also increase the rate of insurance (i.e. critical illness coverage, life insurance, permanent disability benefits etc.)
Cheap term life insurance in Cyprus
Term life insurance premiums in Cyprus are relatively low in comparison to European countries.
As insurance products are not levied with VAT in Cyprus, insurances are comparatively lower.
The insurance sector in Cyprus is an established but growing industry, so insurance companies aim to incentivise businessmen and young people to buy life insurance.
In addition, term life insurance policies are recognised for tax exemptions for both individuals and companies, creating affordable term life insurance in Cyprus.
Best term life insurance in Cyprus
In Cyprus, both local and international underwriters provide term life insurance policies.
International underwriters pay out death benefits quickly without delays making them more reliable than local underwriters.
On the other hand, international underwriters can be slightly more expensive.
To find the best term life insurance in Cyprus, Pitsas Insurances will guide you to understand the different types of term life insurance and help you pick the ideal plan for you.
If you acquire a mortgage, we can negotiate with the bank and convincingly appeal for them to accept a decreasing term life insurance which is more profitable for you.
Benefits of term life insurance Cyprus
Unlike whole life insurance, which lasts your entire lifetime, term life only lasts as long as you need, making it more affordable and popular.
- Lower cost: Term life insurance is significantly lower in cost than whole life. Term life insurance covers you for a set time, resulting in a lower cost than other life insurance policies.
- More coverage: the cheaper premiums of term life insurance mean you can afford a larger death benefit, making it ideal for young families.
- Tax exemptions: Life insurance in Cyprus, in general, is tax-exempted.
Term life insurance quotes
Pitsas Insurances cooperates with all reputable local underwriters in Cyprus and can compare the best term life insurance quotations for you.
Local and international companies make up the two categories of which life insurance underwriters are classified in Cyprus. You will find that their term life insurance policies do not differ significantly.
They provide the same terms and similar premiums due to the high level of competition between them. Despite that, international companies still have some significant advantages compared to local ones.
International companies are more reliable, paying with immediacy and less bureaucracy.
These working methods indicate that large international institutions pride themselves on their reputation and will thus pay the death benefits directly to the heirs of their clients.
Term Life Insurance Cyprus
At Pitsas Insurances, we compare the terms and premiums of all policies provided in Cyprus.
To read more about what our term life insurance can do for you, follow this link.
Online term life insurance in Cyprus
Established in 1985, Pitsas Insurances is a respected online insurance provider with over 35 years of experience and expertise in the insurance industry.
We are renowned insurance providers in Cyprus and have made it easy for our clients to acquire insurance online.
Life Insurance Cyprus
Life insurance is a complex product requiring the careful assessment of our underwriters.
Together with our underwriters, we uncomplicate the insurance buying process for you.
Please complete our online questionnaire for a free quote, and we will send you an offer electronically within a few hours.
Pitsas Insurances Team