Life insurance pays your dependents a monetary lump sum or a regular income on the event of your death. The policy is designed to bring reassurance that your family will be looked after if you are no longer there to provide as the main bread winner.
There are two main types of life insurance:
Term Life Insurance – Runs for a fixed period of time (known as the ‘term’ of your policy). For example, 10 or 25 years. These policies pay out if you die during the policy. The policy will lapse without value if no claim is made by the end of the term.
Whole-of-life policy – Pays out a lump sum no matter when you die, as long as the premiums are kept up to date.
If you have a spouse or children who rely on you financially and have a family home with a mortgage, then a life insurance policy is a must. Your life insurance policy will provide for them if you die.
Life insurance can be extremely good value for money. From just a few pence per day you can fully provide your loved ones with plenty of financial protection.
The average premium for a non-smoker aged 54 taking out £100,000 of life insurance for 10 years is less than £1 a day – that’s half the price of a coffee!
Source: Which, April 2013