Life insurance can help your family to be financially secure after you die. When you  life insurance you stipulate the amount of money you want the plan to pay out when you pass away – this money is called “the sum assured”. The premium you pay is based on this sum insured, and on your age and gender. The premium will also be based on the type of cover you choose. Lots of people get quotes for mortgage cover.

There are two fundamental types of  life insurance: level term assurance and decreasing term assurance plus many variation s within these types.

Term insurance is frequently aquired at the same time as a mortgage and should cover the same period of time as the mortage. If you haven’t died at the end of the insured term, you will not get any money returned. It is a basic insurance with no element of investment. It can protect your wife and family by paying out a cash sum should you pass away within the time covered by your insurance policy.

There are two basic styles of term life assurance. Level term gives a fixed level of payout during the entire life of the insurance cover which means that you beneficiaries would receive the same amount whether you died on day one of the policy or whether you died right at the end of the term. It is usually bought with an interest-only mortgage, where the enturedebthas to be repaid on the final day of the mortgage term.

Decreasing term cover is where the payout reduces by a fixed sum each year, finishing at nothing at the end of the term. Since the amount of cover declines during the term, premiums on decreasing insurance are cheaper than for levelplans. This insurance cover is usually only taken out with repayment mortgages, where the outstanding mortgage reduces during the mortgage term.

There is also a type known as increasing term insurance. Some insurance companies call it index linked insurance. This means that the sum to be paid outrises by a tiny amount annually in line with inflation. It is a good way of protecting the buying power of the payout you have insured for.
With convertible term insurance, the policyholder has the choice of switching to another type of life insurance – for instance a “whole of life”. If a person does take up this their convertable option, they do not have to have any further medical investigations.

If you chose a type of insurance called family income benefit your family would receive a tax free monthly income if you were to die and this income would continue until the policy reached its termination date. This gives your dependents monthly cash payments from the date the policyholder dies to the end of the policy’s term.

Life insurance can be bought on-line or from the high street through  banks, insurance companies, friendly societies and brokers. Most sell directly to the public. Other outlets selling insurance include comparison websites and mortgage brokers.

Factors affecting monthly premiums include the sum assured, sex, age and whether or not you are a smoker. Some insurance underwriters insist on a medical before offering cover, but this is less common as in previous years.

Life insurance prices do alter over time and if you already have an existing plan it can be well worth shopping around to find out if you can get a better deal. You can always finish your existing insurance plan without penalty – but always make sureyou have another plan in place before you cancel your existing plan.

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