What does term assurance provide upon the death of the assured?

Term assurance is a type of life insurance that provides a specific payout to the beneficiaries upon the death of the insured individual within a predetermined period. This means that if the insured passes away during the term of the policy, a lump sum is paid to the beneficiaries, helping them cover expenses such as mortgages, living costs, or other financial obligations. This payout is only triggered by the death of the insured and is not influenced by any critical illnesses or disabilities.

In contrast, other options suggest different benefit structures that do not align with the fundamental nature of term assurance. For instance, regular annual payments are characteristic of an annuity rather than term assurance. A lump sum on diagnosis of critical illness relates more to critical illness insurance, which provides a payment upon diagnosis rather than upon death. Lastly, income during a period of inability to work due to illness is typically covered by income protection insurance, which offers a different form of financial support. Understanding these distinctions clarifies why the correct answer accurately defines the core purpose of term assurance.