Life insurance - an introduction

Life insurance is designed to insure your life against your death, so it works by paying out a guaranteed cash sum if you die during the term of the plan. Some Term Life Insurance Plans can be combined with Critical Illness Cover to also pay out if you are diagnosed as suffering from a critical illness, others will pay out if you are diagnosed with a terminal illness. Life insurance is also known as "Term Life Insurance" or "Level Life Insurance"

Life insurance - why you might need it

Most people take out life insurance to help ensure that their partner or other dependents don't suffer financially should they die (or in some cases, be diagnosed with a critical or terminal illness) for example, the money could be used to pay off a mortgage or other large debt or to provide an income to live on. However, what the money would be used for would really depend on what other arrangements you have in place. If you already have a separate Mortgage Protection policy, then the mortgage would be paid off through this.

Life insurance - what else you should know

You can take out life insurance on your own or with someone else, in which case the cash sum is normally payable only once, for the first person to claim. The payment is tax free and can be spent however the beneficiary chooses. You can either pay premiums each month or, if you prefer annually in advance. The premiums will vary according to how long you want life insurance cover for and other factors such as your age, occupation and medical history.

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