What is Life Insurance?
Life Insurance can pay your dependents money if you die. It is designed to provide you with the reassurance that the ones you love, and your dependents, will be looked after if you are no longer able to provide. You may wish to look further into life insurance when you start a family, if you rely on two incomes, when you buy a house, if illness is a worry, if your parents need you or if you have just become a grandparent.
There are two main types of Life Insurance:
- Term Life Insurance policies: these policies run for a fixed period and they will only pay out if you were to die during the policy. The policyholder pays a premium amount set each month for a fixed term.
- A Whole-of-Life policy: these policies pay out at any time of death. The policy holder will pay a premium each month and on his or her death a predetermined sum is paid to the beneficiaries.
Life insurance usually only covers death – if you are unable to provide for your family because of illness or disability you will not be covered. There is the opportunity to by other insurance products which cover long-term illness, critical illness or total and permanent disability.
The price of an insurance policy depends on many things:
- Your age
- Your health
- Your lifestyle
- Whether you smoke
- The length of the policy
- The amount of money you want to cover, the length of the policy, your age, your health and lifestyle.
The decision to take out Life Insurance is more about the stage in life you have reached. Anyone between 18-69 who lives in the UK, Channel Islands or Isle of Man can apply for Life Insurance. Many people take out Life Insurance that lasts until some key date in the future. It could be when they intend to retire, when their mortgage is paid off, or when they feel their children may leave home. That may help you to decide the number of years for which you need Life Insurance.
For further professional support and guidance on choosing Life Insurance please visit The Money Advice Service. To find a life insurance policy please search our A-Z directory to find the right policy for you.