What is life insurance?
Life insurance is a type of insurance contract which pays out a lump sum to your dependants should you pass away during the term of the contract. The cost of a policy is determined by a number of factors including your age, health and lifestyle.
Why should I take out life insurance?
By ‘dependants’, we mean anyone whose circumstances and material wellbeing would be affected by your death – for example, your partner, your children or anyone else who is financially reliant on you.
Thinking about your death and its inevitable impact on your family’s circumstances is difficult – and many people simply shy away from the topic. But not doing anything could put loved ones at financial risk. That’s why it’s important to confront the issue and take out life insurance.
How does life insurance work?
In most cases, the most effective form of life insurance is called ‘term’ insurance.
This type of policy pays out an agreed amount – the ‘sum insured’ – either as a lump sum or as a regular income, if you die within a specified period – known as the ‘term’.
You choose the size of the pay-out and the length of the term. For example, you may decide to have cover in place until your children are grown up and have left home.
These decisions aren’t always straightforward, which is why we’re here to help. Our dedicated page on how to work out the amount of life insurance cover you need will help you arrive at a sum insured that reflects your family situation.